Defense Industry Component Manufacturer

Company Overview

Defense Industry Component Manufacturer - The Company designs, develops, tests and manufactures highly reliable, precision engineered propellant, electromechanical and pneumatic systems and components for military and commercial aircraft, defense missiles and weapons, and space exploration programs.  The Company contracts directly with the US Army, Navy and Air Force via the Departments of Defense and Homeland Security, as well as NASA, defense contractors and commercial aerospace customers.

Engagement Overview
•  At the time of our engagement, the Company reported revenue in excess of $25M and was owned by a private equity fund. The fund hired Fort Dearborn to: (1) evaluate and revise management’s 5-year strategic plan, (2) assess the impact of pending environmental litigation on the capital structure and (3) identify profit and working capital improvement opportunities.

•  Working with management, Fort Dearborn:
•  Reviewed and revised the Company’s annual budget and operating plan including a detailed review of the Company’s revenue forecast and timing as impacted by the Department of Defense budget including  Congressional defense bill/budget and House Appropriations Committee plus-ups. 
•  Reviewed lean manufacturing actions and identified profit and cash flow improvements.
•  Assisted in restructuring the Company’s debt with two institutional mezzanine lenders.
•  After reviewing the Company’s case with outside legal counsel and assessing the potential range of overall exposure, FDP determined that the Company could experience limited borrowing capacity and reduced liquidity; thus requiring a subordinated debt restructuring.
•  FDP presented its findings and proposed restructuring to the Company’s two institutional debt holders.


Results
•  Successfully advised the mezzanine lenders to restructure their debt into subordinated debt and preferred stock.

•  Fort Dearborn identified opportunities to improve profitability and working capital including:
•  Improving supply chain efficiencies by working with machine shop vendors to reduce lead times and operating expenses.
•  Exploring consolidation of purchasing power among vendors to reduce raw material costs.
•  Reducing inventory throughout the supply chain by reducing lead times and the production cycle.
•  Further implementing lean manufacturing principals
•  Implementing a new vendor qualification process to assess quality, pricing and capacity for growth.