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Global Power Equipment Group, the corporation run previously by incoming MBTA General Manager Luis Ramirez, has had to sell off assets, lay off employees, and risks declaring bankruptcy as a result of erroneous financial statements it filed with federal regulators while Ramirez was CEO. A WBUR analysis of Global Power Equipment’s most recent filings with the Securities and Exchange Commission shows that the company suffers from what it calls “severely constrained liquidity” as a consequence of having to correct four years worth of error-riddled financial reports to the SEC. In March, the company reported that without a new infusion of credit, Global Power may not have the cash to fund daily business operations. Global Power has yet to file its 2016 annual financial statement or its first two quarterly reports for 2017. The MBTA celebrated Ramirez’s experience as a private sector turnaround specialist when it announced his appointment to general manager last week. State Transportation Secretary Stephanie Pollack pointed to Ramirez’s turnaround skills in a new statement issued to WBUR. “I selected Luis Ramirez based on his long and successful career of transforming and turning around complex organizations, including several divisions of General Electric,” she said. “Luis is the right person at the right time to move the MBTA further down the path to being one of the best transit systems in the country.”

“We believe his body of work is exactly what the T needs." Gov. Charlie Baker

The statement included a note that Pollack led the general manager search, and “per statute is responsible for appointing the GM/CEO.” The MBTA did not respond to multiple requests to speak with Ramirez himself. Gov. Charlie Baker also weighed in Tuesday. “We believe his body of work is exactly what the T needs,” Baker said of Ramirez. “I have no doubt that when we have this conversation a year from now, most other people will agree with me.” Ramirez’s LinkedIn page highlights his tenure as CEO at Global Power, and his leadership turning around at least two business units at GE: the corporation’s Energy Rentals division from 2002-2004, and GE Energy Industrial Solutions from 2009-2012. GE is currently selling the Industrial Solutions unit, one of the company’s smallest, according to The Wall Street Journal. “I keep hearing myself described as a turnaround guy,” Ramirez said in Boston last week. “And it’s true I have been charged with improving and transforming very complicated operations.” A detailed analysis of SEC filings tells a different story, at least at Global Power Equipment Group. 'We May Not Generate Sufficient Cash Resources To Continue' Ramirez served as CEO of the Dallas-based energy industry manufacturer from July 2012 to March 2015. The company discovered major accounting errors in the firm’s financial statements during a first quarter 2015 internal review. Ramirez resigned on March 20, 2015. In May 2015, Global Power Equipment notified the SEC that it would have to correct the errors and refile its 10-K form, the annual report all publicly traded companies must file with the federal government. A spokeswoman for the company said Ramirez's departure was not related to the restatements, but did not comment further on the circumstances of his resignation. The company was forced to restate reports for 2011, and 2012-2014 -- the three-year period Ramirez served as CEO. That triggered a cascade of consequences for the firm, including a shareholder lawsuit and an SEC investigation. The company’s stock price has also fallen dramatically, down 75 percent from its value near the end of Ramirez’s tenure. A T spokesman previously told WBUR that the GM search committee was "well aware" of the shareholder lawsuit. But the financial restatements also triggered an even bigger problem. “We may not generate sufficient cash resources to continue funding our operations,” the firm’s restated March 2017 10-K declares. Global Power had two principal sources of money for day-to-day business: cash from daily operations, and a “revolving credit facility” — a line of credit companies commonly use to fund known and fixed daily operating costs such as payroll. Such a credit line is not unusual for an equipment and manufacturing company, according to Andrew Vollmer, a federal securities law expert at the University of Virginia. “Some companies need revolving credit to smooth out the mismatch between the time cash comes in and the time cash must be paid out," Vollmer said. Global Power lost access to that critical credit line in May 2015, immediately after the company announced that its former financial statements could “no longer be relied upon.” With that admission, the company was no longer in compliance with the terms of its loan from Wells Fargo Bank, its former creditor. The bank also took control of some of Global Power’s accounts. Unable to access credit for daily operations, “we have ... funded our operations from our net cash flows from operating activities,” Global Power wrote in a 2017 report. “That is not sustainable," the company said. A Plan To Keep The Company Running In May 2015, the company’s board of directors instituted an urgent “multi-step plan to address our severely constrained liquidity.” Global Power laid off employees, sold off assets to pay down debt, and repatriated $8 million from its Netherlands subsidiary. Specifically, the company closed a 150,000-square-foot gas turbine manufacturing facility in Monterrey, Mexico. It also sold off North Adams, Massachusetts-based TOG Manufacturing, a precision machine parts manufacturer, for $6 million. In 2016, Global Power closed its factory at Koontz-Wagner Custom Controls Holdings, LLC, a wholly owned subsidiary in Chattanooga, Tennessee. Eighty-one employees were laid off. A Global Power Spokeswoman told the Chattanooga Times Free Press at the time that a “downturn in the gas and oil industry [was responsible] for the layoff of nearly all of its local workforce.” "It's a reaction to current market conditions," the spokeswoman told the Times Free Press in September 2016. "When demand falls off as much as it had in the energy industry, the company had to react." The oil and gas industry had in fact experienced a severe downturn. However, in its 2017 report to the SEC, Global Power did not reference overall market conditions specifically in relation to shuttering its factories. Instead, the company said the downsizing was directly a part of its plan to deal with its credit-related liquidity crisis. “The plan has included the following results,” Global Power reports. “We have reduced our ongoing operating expenses. … [We] closed our plants in Monterrey, Mexico and Chattanooga, TN,” In a March 2017 call with investors, then-chief financial officer Craig Holmes said, “The reduction in revenue and profitability caused us to really look hard at our head count.” The company had laid off "over [a] thousand people since the end of 2015,” to keep in line with reduced profit margin expectations Holmes said. He added later: “[S]o really some hard cuts there.” 'A Very Tight Timeframe' To Refinance Its Credit Line But it wasn’t enough. Global Power was also desperately seeking to refinance its credit line. The account with Wells Fargo was set to mature on May 15, 2017. Global Power did not have the cash on hand to repay the balance, and faced the possibility of default and potential bankruptcy. “There is a very tight timeframe” to avoid default, the company’s March 2017 10-K form states. And the time and resources the firm had to dedicate to correcting four years of misstated SEC forms significantly delayed overall efforts to stave off default on its credit line, the company says. Global Power did successfully refinance its credit line on June 16 -- a $45 million account with the New York-based private equity firm Centre Lane Partners LLC. But the loan includes a strict requirement. Global Power must provide the lender with its 2016 annual financial statement by Aug. 31. On Aug. 11, Global Power notified the SEC that it will be late in filing its 2016 annual and quarterly reports. “As previously disclosed,” Global Power writes in the notice, “the company was engaged in an internal review of its historical financial statements ... which has resulted in a delay ... the Company is working to complete the 2016 10-K, and will file them as soon as practicable.” Should the company be unable to file its annual statement before Aug. 31, it will be in default. Centre Lane Partners would have the right to declare all payments immediately due. Global Power may once again face the possibility of bankruptcy. A Lack Of Internal Controls Global Power Equipment Group’s severe financial challenges technically began in May 2015, two months after Ramirez resigned as CEO. But the company’s struggles were caused by error-filled financial statements filed to the SEC, and certified by Ramirez, under his leadership. Shareholders have filed a class action lawsuit against Ramirez, other former executives and the company in a Texas District Court. The SEC is investigating. The company also launched its own internal investigation. Ramirez's attorney did not respond to questions for comment on the lawsuit.

The company’s struggles were caused by error-filled financial statements filed to the SEC, and certified by Ramirez, under his leadership.