Turnaround Today - Issue No. 1

Turnaround Today - R&T eNewsletter from Huron Consulting Group Inc.

What's in Store for Auto Suppliers?

Issue Number 1

Some Auto Suppliers May Be in for a Bumpy Ride
Read Huron’s article as published in The Deal to learn what may be yet to come. The article discusses:

The top industry trends as of early 2008 that are impacting middle market auto suppliers facing bankruptcy/restructuring
How, if at all, the issues facing middle market auto suppliers differ from larger suppliers
Affects the changing conditions in the credit markets or the economy more broadly have had on auto suppliers
The outlook of the prospect for restructurings of middle market auto suppliers

Huron Supports Refinancing and Successful Turnaround
Huron was referred to a family-owned paper converter with $200 million in annual sales by a major lender that was considering refinancing the company's line of credit but found the company's strategic and financial plan to be inadequate. Huron was engaged to perform an assessment of the company and assist management in establishing a sound strategic plan and detailed financial projections. At that time, the company's EBITDA run-rate was approximately zero, annual fixed charges were $6 million, and there was very little undrawn availability on the existing line of credit. Substantial liquidity was created through inventory reductions and increased accounts payable, which led to completion of the refinancing.

While not required by the new lender, the company further engaged Huron to work with its management team to implement pricing, operating, and financial improvements identified during the assessment and serve as interim chief financial officer. Huron designed and implemented detailed business plans; new customer profitability measurement, budgeting, financial reporting, and accountability practices; and incentive plans. Six Sigma and Lean practices were adopted at Huron’s recommendation. Additionally, we assisted the company in consummating two sale lease-backs of real estate and a term loan refinancing.

As a result of Huron’s efforts, the annual EBITDA run-rate improved to approximately $7 million, fixed charges were reduced $4 million, and the undrawn line of credit availability increased to $10-$14 million. The chief executive officer, commented “If it were not for your efforts, I truly believe we would not be here today in a position to determine our own future.”

Huron Leads Company out of Bankruptcy
An international capital goods rental, sales, and services company filed for Chapter 11 bankruptcy protection with a consensual plan of reorganization. After a long financial restructuring, the budget and business plan projections were not being met. The board of directors called on Huron to fill the role of interim chief executive officer to provide stability and leadership to the employees and suppliers after the departure of the company’s founder.

Huron worked with management to identify issues driving the poor performance against plan. Utilization and pricing were the primary concerns which led to the development of a dynamic pricing matrix for the company. Additionally, Huron led the senior management team through an operating expense justification process that resulted in significant cost reductions.

Huron successfully led the company through the transition period following the company’s reorganization and ensuing emergence from Chapter 11 bankruptcy. New financial projections were developed, and the company is now building its path on a solid foundation.

Upcoming Events

ACG Detroit 3rd Annual Golf Outing
September 8,
Commerce Township, MI
TMA Mid America Regional Conference
September 11-12, Oak Brook, IL

Automotive Supplier Finance Summit
October 1-3, Dearborn, MI
TMA's 2008 20th Anniversary Convention
October 27-29, New Orleans, LA

News – In the Press
People to Watch – 2008 Business Professionals Making Their Mark as published in Turnarounds & Workouts Special Report

The Coming Catastrophe by Matt Miller as published in The Deal

Ratio Analysis: Highlighting the Story within the Numbers as published in The Journal of Corporate Renewal

Rolling Up Their Sleeves... Turnaround Professionals Prepare for Increase in Activity as published in the ABF Journal

Frothy to Flat Stems the High-End Deal Flow as published in M&A A Supplement to NJBIZ, Mergers & Acquisitions 2008 Edition, April 7, 2008.

Huron Consulting Group helps clients effectively address complex challenges that arise in financial distress, litigation, disputes, investigations, regulatory compliance, procurement, and other sources of significant conflict or change. The Company also helps clients deliver superior customer and capital market performance through integrated strategic, operational, and organizational change. Huron provides services to a wide variety of both financially sound and distressed organizations, including Fortune 500 companies, medium-sized businesses, leading academic institutions, healthcare organizations, and the law firms that represent these various organizations.

Huron’s restructuring and turnaround professionals assist financially distressed companies, creditor constituencies, and other stakeholders in connection with out-of-court restructurings and bankruptcy proceedings. We work closely with management to create, analyze, and implement strategies that secure the future of the distressed company and identify underlying operational issues, not just financial problems, to maximize the organization’s value to shareholders, creditors, and employees. Our professionals have operational, financial, functional, industry, and cross-border expertise.

Learn more about Huron’s Restructuring & Turnaround team.