MorrisAnderson Turnaround Secures Lender Amendment

Automotive & IndustrialLitigation SupportPerformance ImprovementTurnarounds & Restructuring

30M

Annual Sales

11M

in Debt

CP Industries, McKeesport Pennsylvania

Challenge

Development of seamless pressure vessels for storage and transportation of gases and munitions. $30 million sales. $11 million debt. Specialize in very large high-pressure seamless steel pressure vessels to contain high–pressure compressed gases over a wide range of temperatures. 

  • Declining revenue impacted by Electronic production relocation to Far East and major reductions in DOD spending.
  • Significant fixed costs tied to large and underutilized aged facility and workforce.
  • Earnings impacted as Company saddled with significant debt service.
  • India-based parent Company was no longer willing to provide additional capital funding.
  • Sales for the projected fiscal year to decline +20% from traditional levels.
  • Existing fixed infrastructure coupled with traditional workforce and legacy systems placed significant pressure on a cost basis.
  • Significant capital tied to Raw Materials, WIP, and discontinued inventory.
  • Senior Lender requiring independent assessment and corrective action recommendations prior to agreeing to provide additional capital and/or covenant relief.

Solution

  • Created an integrated functional structure that leverages resources and maximizes productivity and efficiency.
  • Created a culture of proactive sales management and customer interaction.
  • Created realistic budgets based on activity-based costing.
  • Hired a dedicated product development manager to develop and expand new products for the expanding natural gas (CNG) market.
  • Addressed inventory costs by aggressive offshore sourcing, standardization, and reduction of discontinued SKU’s.

Results

  • Implemented functional structure across the organization.
  • The Company implemented an ERP System impacting finance and sales reporting.
  • The Company created and funded independent Beta Plastic Composite manufacturing to address the natural gas (CNG) market.
  • Restructured sales and marketing to target traditional core business.
  • Secured off-shore sourcing for raw materials reducing acquisition costs by +20%.
  • Secured major contracts with traditional industrial customers and the DOD resulting in Company returning to profitability.
  • Senior Lender and Company agree on a Forbearance Agreement that addresses rates, restructuring, fees, and covenants moving forward.