Minimizing debt. Increasing value.
A publicly traded manufacturing company with $100 million in sales was suffering consistent losses. The company had two subsidiaries. One subsidiary used high-technology processes to manufacture components for consumer electronics and other products; the other subsidiary made an unrelated line of personal-care products.
- The market for the company’s components for electronic products was rapidly declining, as the electronic products were being replaced by more advanced technology.
- The remaining high-technology product line consisted only of a small market, and was not large enough to support the size of the existing manufacturing plant as the electronic component product lines waned.
- Although the company made world-class personal-care products from standard materials, this market was declining.
- The company was struggling to master the making of the personal-care products from a more advanced material, which had become the material of choice.
- Corporate overhead was bloated.
- Executive management was out of touch with the operational side of the subsidiaries.
- RSI assisted the Board of Directors to evaluate strategic alternatives and develop a comprehensive restructuring plan.
- Based on the plan, the company harvested and closed down the electronic component product lines, and sold another high-technology product line to the highest bidder.
- RSI worked with the company to develop a 38-point action plan to improve the personal-care product manufacturing operations.
- RSI recommended measures to reduce corporate overhead and other expenses and assisted with implementation of the reductions.
- RSI helped the company to align management goals with the objectives laid out by the Board of Directors.
- In accordance with the restructuring plan formulated by RSI, over a six-month period the company: (a) successfully monetized on certain assets for maximum proceeds and (b) positioned itself for further orderly liquidation at higher value.
- Implementation of RSI’s recommendations resulted in EBITDA improvements of $12 million in the personal-care product business.
- The company reduced its corporate overhead by moving its executive offices into space available at a nearby manufacturing plant.
- Net proceeds over the six-month period available to repay the company’s bank loan exceeded expectations.