MorrisAnderson’s $24 Million EBITDA Improvement Allows Sale for Big Premium

Metals & PlasticsLitigation SupportPerformance ImprovementTurnarounds & Restructuring

270M

Annual Sales

55M

in Debt

Phillips Plastics Corporation, Eau Claire Wisconsin

Challenge

Plastic injection molding company with fifteen plants. Serving primarily the medical instrument and automotive sectors. $270 million in annual sales. $55 million debt.

  • The company faced a 67% drop in its automotive business.
  • $70 million of capital expenditures in a four year period to expand its profitable medical instrument business had increased debt substantially.
  • Liquidity was tight, projected to be only $1 million for a company with revenues of $230 million.
  • Given the uncertainty of the automotive exposure, the bank group wanted to force a sale or additional investment, certain to dilute owners.

Solution

  • MorrisAnderson was brought in as Financial Advisor to review the company’s forecast and develop a viable business plan.
  • Working with company management, the team identified $24 million in annualized cost cuts by consolidating business units, closing facilities, reducing personnel, and decreasing wages.
  • MorrisAnderson helped the company negotiate a forbearance agreement with the bank group that provided the company with additional liquidity and debt payment relief.

Results

  • The company was able to withstand the $40 million drop in its automotive business and gain time to build its medical instrument business.
  • Due to the decisive measures taken, EBITDA improved from a forecasted $12 million to $36 million.
  • The bank group permanently refinanced the company’s debt structure.
  • With the improved profitability, the business was sold to an investment fund, resulting in huge gains for the owners.

Contributors