CASE STUDY
The Client:
A seasoned upstream oil & gas, forging, and machining company stood at a critical juncture, navigating a complex recovery from the economic fallout of COVID-19. With its largest business segment anchored in the volatile oil and gas drilling industry, the company was a trusted player known for its high-spec drilling rigs and precision manufacturing. Facing a looming debt maturity, the company needed a strategic financing partner to stabilize its financial foundation and unlock the potential for growth without triggering adverse tax or ownership implications.
The Challenge:
The company’s recovery was hampered by below-average EBITDA and compressed EBIT, leaving it financially strained and vulnerable. A significant debt maturity loomed, carrying severe consequences if not addressed promptly. The volatile nature of the oil and gas drilling sector further complicated the outlook, as traditional lenders shied away, declining the transaction due to perceived risks. The company’s corporate structure added another layer of complexity, requiring a solution that carefully navigated tax and ownership implications. With liquidity tight and time running out, the company needed a partner willing to bet on its vision and leadership.
Solution:
First National Capital stepped in as the architect of a $35 million debt refinancing solution, secured by the company’s high-spec drilling rigs. Demonstrating confidence in the management team’s ability to execute its business plan, First National structured a fixed-rate financing package that drastically reduced monthly debt obligations, bolstering cash flow and providing much-needed stability. Collaborating closely with an asset-based lending (ABL) partner, First National unlocked additional liquidity to support ongoing operations and growth. The tailored solution was designed to mitigate tax and ownership complications, ensuring alignment with the company’s long-term objectives. By delivering a flexible and strategic refinancing package, First National empowered the company to overcome its debt maturity, stabilize its finances, and chart a path toward sustained recovery in a volatile industry.
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