CASE STUDIES:

Our anonymous client is a well-respected mid-sized operator that grows row crops and raises cattle in Idaho.

Industries

Agriculture, food processing, cattle / dairy

Challenge

The company was in default with its secured lender, illiquid and at risk of survival.

Advanced CFO

Hired to manage cash and create a turnaround plan to help save the business. Advanced CFO implemented system improvements to measure whether the company is on-track. Advanced CFO communicated with key creditors to enlist support, and helped restructure debt to improve liquidity and overall financial position.

Continued Success

The lender maintains that the company is far ahead of expectations. After initially indicating they thought it may take as long as three years to exit Special Situations, their current view is that the farm could exit Special Situations within the next year — an extraordinarily favorable outcome.

CHALLENGE

A $20M, 8,000 acre potato farm and cattle operation in Idaho was in technical default with its lender. The credit had recently been placed in “special assets”, which is the bank department that manages distressed loans. Advanced CFO was retained by the farm owners to help create and implement a turnaround plan, manage and control cash, and make improvements to the company’s accounting system.

SOLUTION

Advanced CFO quickly projected the company’s cash for the next 90 days, and identified ways to preserve cash and accelerate collections. This information helped convince the lender to continue to fund the farm operation while the owners and Advanced CFO created a turnaround plan. Advanced CFO also made swift changes to the company’s accounting system to allow the farm to operate on an accrual basis in accordance with Farm Financial Accounting Standards and GAAP. These system changes allowed the owners and lender to see crop-level profitability, provided a better picture of the company’s cash cycle, and improved the level-of-confidence in the company’s financial statements.

Armed with new and relevant information, Advanced CFO and the owners went to work drafting a turnaround plan for the upcoming crop year that optimized cash and income based on crop and field profitability. The turnaround plan included components to improve farm operations, sell non-performing assets, restructure the company’s debt, and manage budget to actuals. Within four months of being engaged, Advanced CFO presented the turnaround plan to the secured lender who responded, “you’re miles ahead of where we expected you to be”. The lender approved the turnaround plan, and Advanced CFO is now helping the farm deliver results in accordance with the plan.

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