Proos Manufacturing LLC (the Company), a 104-year-old manufacturer of material handling equipment, experienced dramatic growth throughout the pandemic and was suddenly impacted by an abrupt decline in the e-commerce segment of the business in mid-2022.
The Company has maintained strong relationships with its customers. The difficulty began after it experienced rapid growth throughout the pandemic by providing material handling equipment to e-commerce companies nationwide. The Company’s fortunes changed in mid-2022 when the e-commerce segment of its business experienced an abrupt downturn.
As a result, the Company was forced to default on a $10.5M loan secured in 2020 from a senior lender to fund its acquisition by a private equity firm. The Company owed $7.6M on the loan and $50,542 in unpaid interest when the lender requested a court-appointed receiver for the Company.
The Company had recently leased a 131,000-square-foot facility, which it had added to its initial 88,000 square foot capacity in early 2022, just before the e-commerce downturn. It now had no use for this added capacity.
Before the downturn, the Company employed over 250 people. When the court appointed Cascade Partners as Receiver, employment had been reduced to 60 people.
The Cascade Restructuring Team
- Requested the court reject all but a few selected contracts
- Stopped additional costs with selected staff reductions
- Assessed and stabilized operations
- Implemented a cash flow forecast and discipline
- Assessed the management team and reduced excess payroll
- Conferenced with the key customers, sharing plan and promised transparency
Once the Cascade team assessed whether liquidating or selling the assets provided the best outcome for the senior lender, it was obvious, identifying the right strategic buyer was the best course of action.
In seeking a buyer for the Company assets, Cascade identified multiple potential strategic partners. The private investment partnership of MS Metal Solutions, Great Lakes Metal Stamping Inc., and three other Michigan manufacturers proved to be the best buyer to continue the 104-year legacy, save the remaining jobs and provide the best economic outcome for the senior lender.
The Cascade Advantage
The Cascade Restructuring Team’s deep hands-on manufacturing and leadership experience helped turn negative cash flow to positive while pursuing the optimal outcome for the Company, in the shortest possible timeframe, as the risk of losing customers and employees was high. The team’s ability to quickly assess the strengths and weaknesses of the Company’s team and assets made it possible to quickly identify a strategic buyer best suited to maximize the payout to the senior lender, while allowing the Company to continue operations and retain its customers and employees.
The new partnership will help the Company strengthen relations with its proven loyal customer base and strategic business structure as its existing markets continue to rebound and grow.
Cascade Partners served as the Receiver and Sell-Side Advisor for the assets of the company.