Steel Service Center, Fabricator & Decorator

Company Overview

Steel Service Center, Fabricator & Decorator

•  The Company is a $75 million tin mill service center, fabricator and decorator to the canned goods industry providing slitting, cut-to-length and decorating services.

•  The Company had bloated inventories and lack of internal controls over purchasing and production.
•  Management decided to add decorating capabilities but installation of the equipment was protracted and more expensive than planned causing a liquidity crisis and ultimately the loss of customers
Engagement Overview
•  The Company made significant capital investment in long-term strategic assets, financed largely with term debt; subsequently, sales declined 50% due to the economic downturn causing significant operating losses and excessive inventory.

•  FDP was initially engaged to assist the Company with an assessment of its strategic alternatives together with the preparation of an operating plan and forecast.
 Appointed as interim CFO after identifying several operational and internal control shortcomings
•  Provided and implemented recommended solutions to customer pricing and inventory purchasing strategies.
•  After return to profitability, FDP assisted the company in recruiting a permanent CFO
•  FDP led negotiations for new $25 million long-term debt facility with the incumbent lender

•  Several years later, the Company embarked on a capital expansion plan that was mismanaged, leading to a severe liquidity crisis which resulted in failure to pay key vendors and the loss of major customers.

 FDP was retained by the Board as interim CEO in an effort to assess its alternatives
•  Oversaw marketing of the business to strategic buyers, however rapidly declining sales and inability to buy raw materials made a going concern sale impossible
  •Developed and implemented a bank supported wind-down plan:
•  Maximized the recovery on inventory by converting the majority of raw materials to finished goods
•  Led AR collection efforts with employees
•  Generated highly competitive bidding on major production equipment lines.
Results

Initial Role:

•  Interim CFO role was critical to return Company to profitability during first project with Company by reducing excessive inventories, establishing controls over purchasing, job pricing and production

•  Negotiated new long-term financing agreement with current lender after successful turnaround 

Subsequent Role:

•  Retained as interim CEO to assess options - quickly determined that the sale of the Company as going concern was not practical and immediately developed plan to maximize value of assets in an orderly wind-down
•  Successfully managed the Wind-down which generated 100% recovery for the secured lender who also provided financing for the wind-down, and delivered a 50% return to unsecured creditors