Multinational Manufacturer

Background

Privately held, the company was one of the world’s largest wood pellet manufacturers. Its customers included major electric utilities in Europe and Japan. Funded by equity investments of over $100 million beginning in 2008, the company had plans to rapidly build out a network of plants.

By late 2009, the company was generating substantial losses, customer delivery and quality commitments were not being met, new projects were behind schedule and over budget, and the private equity owners realized the investment was in jeopardy.

Project

In March 2010, a Zolfo Cooper senior professional was retained as interim management, working with a project manager, to turn around the company and preserve the investment.

Outcome

  • Reduced overhead 40% within six weeks, re-set organizational priorities and replaced plant management.

  • Implemented rigorous spending control mechanisms and ground-up cash forecasting.

  • Negotiated agreements with suppliers to purchase wood chip rather than whole logs, eliminating a processing step while reducing cost and required acreage at the plant by over 60%.

  • Developed and implemented a plan to modify the plant to run a lower cost raw material, reducing standard costs by over 20%.

  • Amicably renegotiated terms with the German equipment supplier to extend payments and eliminate €8 million in obligations for committed purchases.

  • Instituted formal project management program with the engineering construction company, in charge of design, construction, commissioning and initial operating responsibility, to a formal and predictable program management structure. Successfully trained company personnel and transitioned operating responsibilities.

  • Before Zolfo Cooper’s involvement, the private equity owners had considered writing off the investment. Five months later, they were contemplating a scenario of a 3-times return on investment.