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Case Study: Manufacturer of Injection-molded Plastics

Workout Consulting, Operational Restructuring

Company: $80 million roll-up of three divisions engaged in the custom-manufacture of plastic injection molding and also providing assembly, secondary operations and tool making to its customers

Situation / Tasks Performed: After a period of acquisition, the Company found itself to be highly leveraged with $65 million in secured debt that it was unable to service. Payables were being stretched, sales were in decline and the Company was not performing on an EBITDA or cash flow basis. TRG was engaged by the Company at the request of the equity sponsor to (a) develop a 13 week cash flow, (b) assist in the analysis and development of an EBITDA recovery plan, (c) assist with vendor and banking relationships and (d) assist with a debt restructuring.

TRG's initial analysis revealed liquidity issues and a large number of unprofitable customers and jobs. TRG prepared an initial and follow-up 13 week cash flow and 12 month proforma. As part of these projections, TRG assisted in identifying and quantifying cost reduction opportunities including savings on raw materials and the downsizing and consolidation of plants. TRG also assisted with cash flow and vendor management. TRG initiated a preliminary Company-wide analysis of product line profitability to target unprofitable jobs and customers. This analysis was taken over by the Company and has provided keys to improving profitability through the job mix as well as furthering the Company's understanding of their cost structure.

Results: The Company is presently operating under a forebearance agreement and beginning to see the results of cost-cutting measures that have been undertaken. Further consolidation plans are being developed as part of a comprehensive operational restructuring. The Company's objective is to develop a recovery plan that will yield an achievable and sustainable level of EBITDA to allow the Company to restructure it's balance sheet.

Nature of Assignment:
Primary: Workout Consulting
Secondary: Operational Restructuring

Industry: Plastics

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