Cosmolab (Specialty Packaging)
Interim management, investment banker, and financial advisor. $70 million in revenues. $20 million debt. Color cosmetics manufacturer, wood case eye pencils. Key customers: P&G, Avon, L’Oréal, Estee Lauder. Private Equity ownership.
- Failed expansion into direct retail business combined with recession reduced revenues 35% to $45 million and created losses.
- Excess inventory approached 50%, margins neared 6%, and 37% of products sold at a loss.
- Senior secured lender over-advanced $3.7 million.
- Liquidation analysis showed potentially impaired $10 million on a $19.8 million note.
- Private equity sponsor winding down and unable to fund additional losses.
- MorrisAnderson engaged by the Company as CRO and Interim CEO to manage turnaround process and sell company.
- MorrisAnderson worked quickly with senior management to implement cost savings opportunities.
- Reduced workforce by 284, implemented salary reductions of 10-25%.
- Increased pricing on 65% of line, improving margin to 21.6%.
- Eliminated non-strategic assets in China and Oxnard, CA.
- Negotiated terms with vendors and forbearance agreement with lender.
- EBITDA improved from negative $1.0 million to positive $2.1 million.
- Revenue stabilized at $42 million, while forecasted full year EBITDA was $5.5 million.
- 54 NDAs signed by potential buyers, with five getting to due diligence.
- Three bidders present at the §363 auction, which pushed the final price 27.7% over stalking horse bid.
- Company sold for $16.6 million.
- The sale closed just 78 days after bankruptcy filing.
- Senior lender improved recovery by $7.5 million.
- 400 jobs saved.