Case #438

$170 million injection molding company

This $170 million company owns a number of injection molding plants throughout North America, including Toronto and Mexico. Its client base includes prestigious names in the appliance, automotive and consumer-goods industries.

The company was built up as part of a roll-up strategy, which combined 12 mid-sized plants mostly in similar geographic areas that served related groups of customers.

A troubled situation evolved as the company missed its financial projections on a number of occasions, another new CFO came into what had become a revolving-door position, a major system initiative to convert the company onto a single operating platform was underway, and the company was in technical covenant default on a number of criteria. Total debt stood at $90 million.

The complicating factor was that the banking agent had interests in several other deals with the molding company’s equity partner and its total exposure too high due to a recent merger.

The Morris-Anderson & Associates crew assessed the company’s projections, business plans and personnel. Our operations team visited a number of the plants in Canada, Mexico and the U.S. to perform individual in-depth assessments of management and the plants. We combed through the company’s budgets and projections.

Finally, our crew presented its findings to the bank group and management, and then became part of ongoing management meetings.

Given our assessment, the banking agent felt confident to restructure its various loans, and the company was given the capital to grow by its equity group. Although the company continues to struggle with the difficult economic climate, it is now stabilized and its financial performance is relatively predictable. Morris-Anderson & Associates continues to monitor the company’s performance and provide advice to the bank group in this ongoing workout.