Fabricator & Glass Distributor

Phoenix serves as Chief Restructuring Officer to one of the largest fabricators in North America and preserves more than 1,500 jobs.

The Client

Phoenix’s client was one of North America’s Largest Fabricators and value added distributors of architectural glass and aluminum products with 28 manufacturing and distribution facilities located in 19 states nationwide. The Company provides a comprehensive line of products (insulated, tempered, mirrored, laminated, and decorative glass as well as aluminum extrusions and windows) to more than 5,000 customers in commercial and residential construction markets. Recent annual revenue declined to $260 million with approximately 1,500 employees, down from a peak of $400 million of annual revenue with over 2,500 employees. The Company was privately held by an equity fund and by the founding family owner/operators.

The Challenge

As a result of the downturn in the commercial and residential construction sectors leading up to and following a collapse of the credit markets, the Company experienced significant declining revenue and shortfalls in its cash-flow which resulted in financial covenant and payment defaults under its $100 million Senior Secured Credit Facility and $13 million Subordinated Loan Documents. The Company entered into multiple Forbearance Agreements with its Senior and Subordinated Lenders and initiated cost savings efforts but did not have the experience and resources to resolve the situation on its own. Ultimately, the 7 member Senior Lender Group required the Company to retain the services of an independent Chief Restructuring Officer (“CRO”) to direct the Company in improving the operations and financial performance of the Company and to develop and implement an effective action plan to retain and maximize value. Phoenix, through its affiliate PMCM, LLC, was retained and Vince Colistra was named CRO as a result of his and the firm’s previous experience and success in the building products arena.

The Solution

Phoenix immediately provided oversight with regard to managing and forecasting daily and weekly cash flow and borrowing availability and took the lead on communications and negotiations with the owners, board of directors, management team, lenders, and other major constituents in order to develop and implement an action plan. Phoenix worked with the management team to develop, maintain, and update rolling 13-week cash flow forecasts and scorecards. Phoenix also prepared and monitored a detailed monthly GAAP financial projection on a branch-by-branch basis to be able to capture and report actual and proforma impacts of numerous restructuring initiatives on a more real time basis. Phoenix helped implement, negotiate, and validate over $25 million of proforma EBITDA addbacks relating to plant closings, headcount, and salary reductions, real property lease savings, tractor and trailer lease savings, car fleet savings, and healthcare savings. With credible forecasts and the validation of the future impact of significant cost savings, Phoenix was able to obtain the required cooperation of the various constituents and time necessary to implement an effective action plan.

Due to the continued, precipitous decline in the Company’s business and the lack of additional funding support from existing owners and lenders to completely effectuate the turnaround and stabilize the business, the parties agreed that a sale of the entire operations was the best course of action. It was further determined that the sale would need to be effectuated through a Chapter 11 Bankruptcy 363 process. The Company entered bankruptcy on November 25 that year with a stalking horse bid from a Colorado-based Company.

During the 363 bankruptcy process, Phoenix advised the Debtors’ managers, officers, and legal professionals on various operational, financial and management issues during the case and helped usher the Company to a successful emergence by providing critical support in the following areas; (i) assisted in the due diligence process performed by six potential private equity bidders; (ii) developed and updated the estimated sources and uses of funds and projected recoveries upon emergence from Bankruptcy; (iii) developed a detailed and comprehensive liquidation analysis; (iv) negotiated DIP financing agreements; (v) performed a detailed review of all administrative claims as well as 503(b)9 claims; (vi) developed the schedule of contract cure amounts; (vii) assisted in the preparation of Bankruptcy Schedules, Statement of Financial Affairs (“SOFAs”) and the Monthly Operating Reports (“MORs”); and (viii) provided information to the unsecured Creditors Committee and its advisors and assisted in negotiating the final settlement between the Senior Lender Group and the Committee.

The 363 bankruptcy process included significant due diligence by several private equity investor groups on an extremely tight time-frame. Ultimately, the bidding process resulted in a final winning offer from Sun Capital Partners which was 34% higher than the original pre-bankruptcy bid and 114% higher than the estimated worst case net liquidation recovery values. The Company emerged from bankruptcy protection on January 29, just 65 calendar days after the bankruptcy filing which included both the Thanksgiving and Christmas holiday seasons. The final outcome resulted in the preservation of more than 1,500 jobs and a recovery to secured and unsecured creditors that exceeded expectations.

Phoenix Turnaround

Primary Industry

  • Manufacturing

Secondary Industry

  • General Building Construction

    Primary Services

  • Turnaround ManagementCrisis ManagementInterim ManagementBusiness / Operational AssessmentsFinancial ForecastingStrategic AdvisoryBankruptcy AdvisoryLiquidation / Business Wind Down