Golden Wonder was a FMCG specialising in Snacks & Crisps supplying all the major retailers. It had a turnover of £150m and 1,000 employees on 3 sites in the UK. The company was the market leader in 1994 but by 2004 had slipped to third position. The business had been purchased by Middle Eastern investors. Performance since acquisition deteriorated rapidly with a volume decline of 25% and operating losses of £15m.

Procurement savings contributed £4m in the first 12 months. The recovery plan included a renegotiation of terms with Proctor & Gamble for the production of mini Pringles. The triennial valuation of the pension scheme produced a deficit of £60m, which led to the appointment of Administrators. Restructuring onto one site was effected through the Administration and the business was sold with a return to profitability of £5m.

Texon had once been the largest manufacturer of footwear components in the world. It had sales of $200m, a predicted EBITDA of $35m and 1,250 employees. The group comprised 57 subsidiaries and operated from 27 countries.

The Company had entered into a “Scheme of Arrangement” to reduce its bond debt from £80m to £60m and the senior lender had increased its exposure to £45m. There were also significant bi-lateral banking lines in place. Accounting irregularities in the main UK business and a review of the other subsidiaries led to the Group recording a loss of $90m, leading to a deficit on shareholder funds equal to the senior bank debt and a breach of banking covenants. The “Scheme of Arrangement” depended upon arrears of interest being paid in early 2003, and the senior lender and major shareholder agreed to provide the money to pay the arrears.

A recovery plan included sales of non-core subsidiaries, slimming the workforce by 500 and the merger or closure of many offices. The sale of the group’s interest in its Brazilian joint venture created a tax loss in Texon’s Italian subsidiary in the final year so capital losses could be offset against trading profits.

A second financial restructuring led to the elimination of the remaining bond debt. Legacy liabilities of $30m in respect of PREB, pension schemes and onerous leases were resolved either by negotiation or further restructuring.

As the group’s senior management had been involved in the turnaround process they continued to send cash to the holding company. Another cash benefit was derived from eliciting the support of the Trade Insurers which was vital to allow the group to continue to trade.

At the end of the first year Texon recorded a profit of $20m which restored the carrying value for the senior lender and the shareholders.