Acquisition from Insolvency and Restructuring of a Wood Pellet Manufacturer

Client

American private equity firm

Company

Manufacturer of wood pellets and animal bedding products, largest pellet plant in Germany
Production of approx. 200,000 tons of wood pellets and 15,000 tons of animal bedding at a site in Eastern Germany

Contact Person

Michael Hessing

Role of EIP-Partners

Interim Chief Restructuring Officer / Chief Transformation Officer
Interim Chief Financial Officer

Challenges

Plant had not produced for 6 months during insolvency
Customers and suppliers alienated due to a fraudulent insolvency
Significant investment backlog in the power plant and pellet lines
Lack of experienced management team
Completely inadequate business management control tools
Insolvency-related unclear regulatory situation with authorities (BAFA; Main Customs Office, Federal Environment Agency) regarding EEG surcharge, electricity tax, CO2 certificates, insufficient fire insurance
Market with significant overcapacity
Supply issues with raw materials and the outbreak of the COVID-19 pandemic

Approach

Appointment of interim Chief Restructuring/Executive Officers and Chief Financial Officers
Development of a restructuring concept
Implementation of liquidity safeguarding measures
Negotiations with the banking pool and investor for refinancing the company
Restructuring and implementation of cost reduction and liquidity-enhancing measures
Securing energy supply through the construction of an in-house power plant
Preparation and support for the sale of the company to a strategic buyer
Integration of the company into the corporate group

Selected References

Development and implementation of a restructuring and turnaround plan
Recovery and acquisition of new customers for own products and establishment of an additional trading business
Revenue increase by 128% within two years
Construction of a new power plant (66 MWth / 17 MW electric CHP)
Production capacity utilization achieved within 4 months; profitability reached after 6 months
Acquisition of external capital to secure financing, later complete recapitalization of external financing
Turnaround in profitability and increase in EBITDA margin from minus 2% to plus 13%
Successful sale/exit to a strategic investor, generating a value increase of €50 million
Successful integration of the company into the corporate group and leadership of the new business segment (revenue: €1 billion)