Case Study
Midwest paper company
At a glance
Midwest Paper Group (MPG) was in a state court receivership due to lender defaults and insolvency. Trunnion evaluated available options and presented a turnaround solution.
MPG now generates more than $20M in annual EBITDA for a $30M investment.
Successful turnaround achieved for 1/2 the cost in 1/4 the time.
the facts
MPG produced a commodity in a rapidly declining industry. Excess costs (labor, raw materials) and unfavorable contracts lead to significant cash flow losses. The Receiver was forcing a quick sale process which left little time for a detailed due diligence process. The Buyer’s intent was to liquidate the business.
solutions
Forgo a quick $5M gain, reinvest purchase price + $10M to fund a Turnaround Plan. The goal of the solution:
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Convert product from white paper to booming brown paper packaging industry.
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Negotiate new lower costs agreements and staged employee hiring.
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Collect outstanding receivables & evaluate management.
results
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Operation Conversion to Booming Industry
Converted 2 of 3 production lines to brown paper production.
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New Union Agreements Secured
Brought back only key workers during transition. MPG now employs over 200 full-time employees.
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Efficient Turnaround Achieved
Completed conversion of equipment for $15 million and transitioned operation to a brown paper maker in 6 months. This is one-half the cost and one-fourth the time estimated by paper industry experts.