National Central Cooling Company (PJSC) – “Tabreed” is one of the world’s largest commercial district cooling providers in the world. The UAE based company had an incredible growth rate from 2006 to 2008, designing, building and commissioning some 30 new plants. Owing to the nature of the business, wherein Tabreed finances projects and recovers its investment over a span of 20 to 25 years, Tabreed relied heavily on debt financing. However, after the 2008 credit crunch, Tabreed ran into liquidity challenges prompting Tabreed’s shareholders to appoint a new board of directors and senior management with their main mandate to restructure Tabreed’s debts. As part of the recapitalization program, they wished to assess Tabreed’s existing plants, customers and potential customers.
I was tasked by my director to run an assessment of the current customers (legal and commercial) and leads that I was working on and to assist my colleague in capturing this information and reflecting their financial impact on a plant by plant basis.
My main challenge was to forecast the revenues and supply dates of some of Tabreed’s existing customers. The challenge was due to existing disputes, weak / ambiguous contracts or bad customer credit rating. To complicate matters, at the time there was a set of 4 or 5 varying versions of existing contracts. After standardizing them into a single spreadsheet, I added my forecast of future customers based on discussions I had with them. In tandem, I assisted my colleague in capturing this information on the company’s financial model and ran a sensitivity analysis to assess the impact of our forecast on the plants’ profit margins. I then went on compiling evidence and correspondences that would substantiate my forecast. I also set about meeting with existing customers to better understand their requirements for the future especially for those under weak / ambiguous contracts. After a couple of weeks working on this assignment, my colleague and I met with our director to walk him through our forecast and provide supporting evidence to our forecast. After a couple of meetings and revisions based on his input we completed our assignment and submitted our final version to our director. I was also asked by my director to attend the senior management review and provide substantiation and defense of the numbers when required by the CFO, CEO and external advisers. My forecast, after a couple of revisions, was accepted by the CFO, CEO and external advisers and would later on be integrated within the main report that would be presented to the company’s lenders.
After months of negotiations with the company’s lenders, the company finally reached an agreement for the recapitalization of its debts. Although, the revenue forecast was but a small part of this effort, it was nonetheless an important step to assess the company’s future profit generation potential. I was particularly proud that I was asked to assist in this important company mission, I was content with the level of faith my director and senior management had in my abilities, work and customer relations. I was even more proud that my numbers and forecast were largely accepted by my senior management.
This was one of the first more meaningful corporate finance experiences I was fortunate to have; it instilled in me a sense of admiration and curiosity to learn more about this subject and was one of reasons I decided to pursue my MBA training and education.