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Case Study: Foam Rubber Manufacturer

Company: $100 million plus manufacturer of closed cell rubber foam products and custom mix rubber polymers for automotive, industrial, insulation, athletic and consumer markets. The company employed approximately 900 persons throughout six principal manufacturing locations.

Situation/ Tasks Performed: The Company was the surviving entity of a corporate reorganization upon consummation a of Chapter 11 bankruptcy proceeding in 2001. After a marginal profit in 2002, the company incurred a significant loss in 2003, driven by “loss operations”, a crippling strike, legacy costs and heightened foreign competition. TRG was employed by the company in December 2003, at the request of senior lenders, to evaluate the company’s consolidation plan and provide an independent assessment of viability. Within four weeks, company management and TRG concurred that an adequate rate of return could not be achieved on the capital investment needed to effect the consolidation.

TRG prepared analysis that indicated a forced liquidation value of $20-24 million and an orderly liquidation value of $31-42 million. TRG and the company further developed a plan to close unprofitable operations, sell off idle assets and stabilize liquidity to allow maximizing value through orderly sale of operating entities at enterprise value. Upon acceptance of the plan by senior lenders and subsequent filing for Chapter 11 protection by the Company; the Company and TRG commenced marketing viable businesses, closing non viable entities and maintaining strict control over cash requirements.

Results: Senior lenders were paid out within six months of our initial engagement. Total recovery will be between $32 to 34 million and accomplished within nine months. The majority of employment will continue, albeit under new ownership and economic conditions.

Nature of Assignment:
Primary: Business Plan Review & Assessment
Secondary: Wind-down & Liquidation Plan and Analysis

Industry: Manufacturing

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