Consumer & OEM Plastics Provider

The Situation

The client was a plastic blow molder with a line of proprietary retail products and custom OEM parts sold across a number of industries. Due to numerous missteps including a missed retail deadline, an outstanding EPA violation and one of two facilities falling behind their production plans, the company lost key OEM customers and its pipeline began to deteriorate.  Operating performance and profitability declined, the company underperformed several times against its financial forecast and it was clear that the company would soon violate several covenants in its loan agreements.

Role(s)

  • CRO
  • Financial Advisor

The Work

CR3 was initially engaged to assess the root causes of the company’s underperformance against its forecast. As the engagement progressed, the board ultimately determined it needed a change in leadership and retained CR3 as Chief Restructuring Officer. We quickly reorganized the product-development team to address the failed regulatory aspect of a new product and to speed up its introduction. We recruited new plant leadership and established task forces to isolate and address issues with three specific OEM customers. CR3 developed an action plan to resolve the commercial concerns, created a capex program to deal with the internal issues and negotiated with the senior secured lender to restructure the balance sheet.

The Results

CR3 helped the company secure regulatory approval for its new product and settle its outstanding EPA violations. Although the commercial issues were resolved with the OEM customers, CR3 and the company jointly determined that the operational infrastructure was insufficient and unable to economically produce the higher-tolerance products, and that as a result, funding could not be secured for sufficient plant and equipment improvements. A sale process was undertaken for the company’s consumer-products business, a partial book of the OEM segment and one of its two facilities. CR3’s diligent handling of the sale ensured that jobs and the remaining enterprise value were preserved, and the remaining facility and associated equipment were sold separately for asset value in order to receive the highest possible recovery for the financial constituents.


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Overview

  • Manufacturing
  • Restructuring and Turnaround

Engagement Team