Company Overview
The Company is a leading label printer for the wine, spirits, food, beverage and agricultural industries.
The Company's label printing capabilities include digital offset printing, flexographic printing, waterless offset and shrink sleeves.
The Company was the result of a roll-up of several regional printers in the West Coast and Canada.
Engagement Overview
FDP was hired to provide an independent review of the Company’s financial forecast and13-week cash flow projection and recommend opportunities for improving the Company's profitability and cash flow.
The Company acquired a rival for $51.2M, obtaining financing of $35.4M in senior notes and $20.6M in subordinated debt.
After the acquisition, the Company operated in six locations in the U.S. and Canada.
The Company violated leveraged loan covenants the first two quarters after the acquisition, and management began to take proactive measures.
FDP’s restructuring plan included:
–Two reductions-in-force, with a third one planned;
–Pursuing material cost reductions;
–Consolidation of two plants;
–Estimating shortcomings (e.g. estimating did not provide for adequate margins) and implementing corrective actions;
–Revising the order-to-press process flow to speed order cycle time and increase on-time deliveries, and thereby reducing expedited shipping costs; and
–Various process improvements, waste reduction and material saving initiatives.
Results
The owners injected capital into the Company to support the restructuring initiatives developed by FDP and management.
The lenders were able to negotiate a keepwell covenant requiring the equity sponsor to support any shortfall of principal and interest payments during the restructuring process.
The Company, over the following year, continued to execute to its plan of cost reductions, select pricing adjustments and process improvements.