High-end Commercial Web and Sheet Printer specializing in the cosmetics and pharmaceutical industry. $80 million in annual revenues. $46 million in debt. Two plants in two states.
- Company was caught in the severe economic decline impacting most of its main lines of business.
- Revenue had fallen from $140 million to $80 million and was poised for more decline as consumer product demand continued to drop
- Original equity was out of the money.
- Rescue capital of $15 million, put in just 9 months earlier from mezzanine lender, was out of the money.
- Lender group was facing a material loss on its position.
- Sales management, who had lost its equity and controlled the customer accounts, was threatening to take their accounts elsewhere.
- MorrisAnderson retained to assess the viability of the business plan because prior Fortune 100 consultancy firm could not determine the business risk to the satisfaction of the lenders.
- Prepared comprehensive business plan assessment and operational and financial review of core business model and the assumptions driving projections.
- Identified scenarios under which the lender could provide support for the company by assessing the risk and cooperation attendant among the stakeholders.
- Devised exit scenarios and operating scenarios the company could work with to mitigate the lender’s risk.
- Company’s long term business plan valid through a series of detailed analyses conducted by the MorrisAnderson team.
- Cost reductions of $4 million identified and integrated into the business plan to improve financial strength and viability.
- MorrisAnderson recommended that the risk of further failure was too high for the Lender’s risk tolerance.
- Plan for exiting the credit that was favorable for the lender and kept the company intact and viable for shareholders.
- Lender group exited within 3 months.