MorrisAnderson Assessment Aids in Loan Amendment
90M
Annual Sales
35M
in Debt
York Wallcoverings, York Pennsylvania
Challenge
$90 million manufacturer and distributor of wallpaper, wallcoverings, and interior décor. $35 million debt.
- Company sales declined more than 10% over two years due to economic weakness in several key foreign markets including Russia and Brazil and the waning popularity of licensed peel-and-stick wallcovering products related to the “Frozen” movie franchise
- Organic residential wallpaper demand has been steadily eroding for decades, though some signs of increased adoption in the United States was present in niche markets
- York was purchased by private equity in a leveraged buyout at the height of its revenues; sales declines led to EBITDA that was half of that at the time of acquisition and widespread covenant defaults
- Company was pursuing a risky turnaround strategy focusing on new products for interior décor
- Senior lender was questioning whether the business was viable and whether a restructuring or a liquidation should be pursued
Solution
- Comprehensive assessment of the financial performance of the company relative to the capital structure and likelihood of achieving the turnaround projections
- Evaluate new company president and overall management team and their ability to execute the proposed turnaround strategy
- Recommend potential restructuring concepts and help broker an agreement between the lenders and the company to provide a stable path forward
Results
- Lender provided covenant waivers and amendments to allow company to pursue its strategy without requiring additional capital investment by the private equity owner
