Industries

Food & Agriculture Management and Restructuring

From inefficient operations and limited inventory control to environmental concerns, rising fuel costs, and changing consumer behavior, food and agriculture businesses have a lot on their plates. 

What challenges are middle-market food and agriculture companies facing in today’s market? A company in this sector may experience insufficient cash flow suddenly due to a supply chain disruption, higher raw materials costs caused by inflation, or extreme weather conditions due to climate change. 

Population growth, limited resources, and unsustainable food systems can also put financial pressure on food and agriculture businesses, causing liquidity concerns. At times like this, the company may need an experienced advisor to guide them.

SierraConstellation Partners (SCP) has decades of experience in the food and agriculture industry. We work in lean, purpose-built teams to develop and execute a custom-tailored business strategy for your organization. SCP helps companies navigate challenging situations, whether it’s a merger or acquisition, bankruptcy declaration, or business restructuring.

Food & Agriculture Interim Management

What are interim management services? The company brings in an experienced executive to temporarily fill a leadership gap. Someone in the leadership team may have stepped down. Current management may be struggling to navigate a merger or acquisition. The company may have defaulted on a loan due to an unexpected weather event or supply chain challenges. 

SCP guides businesses through unsettling times. Our food and agriculture industry experts understand the specific headwinds of this sector and help put companies on a sustainable path to profitability. We provide CEO, CFO, COO, CRO, and general managerial services. SCP’s hands-on professionals analyze the situation and develop revenue strategies for long-term growth, working with the executive team to improve performance and maximize productivity.Identify and address management challenges with our interim management services to fortify your team’s capabilities and drive impactful change.

Food & Agriculture Financial Restructuring

A food processing plant or agricultural business may have tried to expand operations without a solid financial plan. There may have been an economic downturn that affected sales. They might be filing for bankruptcy, facing a lawsuit, or considering a major business restructuring and need professional guidance.

SierraConstellation Partners has deep expertise and handles these types of situations every day for food and agriculture companies. We provide comprehensive restructuring services, from implementing post-merger integration processes to creating and executing a liquidation plan to extract maximum value. Our team of former CEOs, CFOs, COOs, investment bankers, and private equity investors can design and negotiate restructuring transactions, manage essential projects, and provide analytical M&A support, working closely with company executives, lenders, and other stakeholders.

Food & Agriculture Turnaround Management

When does an agricultural company or food processing plant need turnaround services? The share price may have dropped due to poor business decisions or operational challenges. The company may be struggling with a mountain of debt. There may be labor issues or a quick expansion that wasn’t well thought out. The SCP team of hands-on financial experts can help companies become profitable again. 

SCP’s turnaround management team focuses on a short-term strategic plan to address operational challenges, deal with financial issues, and boost overall performance. They’re brought in before insolvency and achieve this ‘quick about-face’ through bold actions and initiatives. The lean team analyzes the company’s financial state and proposes and executes realistic plans that drive productivity and align with company and stakeholder goals.

Food & Agriculture Performance Improvement

A food distribution company may have trouble meeting customer demand with its current operations. There may be rising supply chain costs or declining revenue for a primary product line. An agricultural company’s processes may be antiquated and need updating to remain competitive in a rapidly changing business environment.    

Through robust analysis, SierraConstellation Partners helps food and agricultural companies understand the key performance drivers across their unique business landscape. Our seasoned professionals then “dive into the trenches” alongside management to help them execute strategic plans for performance improvement and sustainable growth.

Food & Agriculture Services Talent & Culture

A farming business or food processing firm may find hiring and retaining high-quality, specialized talent challenging. This unique industry has many moving parts and is especially vulnerable to economic, geopolitical, and environmental events. Companies in this sector need a strong, nimble, purpose-built team to succeed. 

Our customized talent management services at SCP help businesses navigate transitions and set them up for long-term success. Our talent and culture experts support human resources departments, providing strategic organizational development and enabling seamless leadership transitions. In M&A situations, we can lead integration efforts. We develop strategic workforce plans and lead talent acquisition efforts using in-depth data intelligence.

SCP—Financial Experts for the Food and Agriculture Sector

As a leading business advisory firm for the agriculture and food sector, SCP serves middle-market companies, partners, and investors. We help businesses navigate financial challenges and focus on strategic, sustainable growth. Put our team of former CEOs, CFOs, COOs, investment bankers, and private equity investors and their practical experience and hands-on approach to work for your company. Get in touch with one of our experts to start planning your future today.

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Case Studies

Food & Agriculture Industry Team Members

William White

Senior Director

Roger Gorog

Senior Director

Christian Sorensen

Senior Director

Philip Kaestle

Managing Director

Bob Riiska

Managing Director

Kevin Santos

Director

Curt Kroll

Partner

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William White

Senior Director

Los Angeles, CA

BiographyNotable AssignmentsMedia & Awards

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Industry Expertise

William White, a Senior Director at SierraConstellation Partners, has over 12 years of experience advising companies and creditor groups through complex transactions, including in- and out-of-court restructurings, distressed mergers and acquisitions, and challenging financings.

He has worked with clients across a variety of industries and executed transactions ranging in size from less than $100 million to over $20 billion. His industry experience includes apparel, automotive, consumer retail, manufacturing, distribution, infrastructure, technology and telecommunications.

Prior to joining SCP, Mr. White was a vice president in the restructuring group at Rothschild, Inc. in New York. He also worked as a financial analyst in the financial restructuring group at Houlihan Lokey and as a financial analyst in the corporate finance group at Ernst & Young.

Mr. White holds a bachelor’s degree in business administration from the University of Southern California and earned his MBA from New York University.

  • Served as interim manager of a designer, manufacturer and retailer of branded children’s apparel operating 82 stores and an e-commerce platform during its restructuring and sale of assets.
  • Advised a leading manufacturer of waste handling and recycling equipment in North America on the consensual out-of-court restructuring of $725 million in debt obligations.
  • Advised a leading global manufacturer of wire harnesses on its $325 million pre-packaged restructuring.
  • Advised a global Tier 1 automotive supplier during its Chapter 11 restructuring of approximately $22.2 billion of pre-petition liabilities.
  • Advised a Tier 2 industrial supplier on its $335 million pre-negotiated restructuring.

Media

Awards

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Roger Gorog

Senior Director

Los Angeles, CA

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Industry Expertise

Roger Gorog, a Senior Director at SierraConstellation Partners, provides operational and financial advisory services to underperforming companies and companies in transition. His experience includes in- and out-of-court restructurings, business cost rationalizations, operational turnarounds, interim management, and transaction advisory services. Roger has experience across a variety of industries including, Aerospace & Defense, Business Services, Construction, Consumer Products & Retail, Energy, Financial Services, Food & Agriculture, Healthcare, Manufacturing, Real Estate, and Transportation & Logistics.

Before joining SCP, Roger was a Director at Alvarez & Marsal in their Healthcare Group where he worked on several large bankruptcy cases and numerous out of court restructurings. Prior to A&M, Roger worked in public accounting at Deloitte & Touche where he worked on financial statement audits of various corporations, both public and private.

Roger received his bachelor’s degree in economics and accounting from Claremont McKenna College and his Master of Business Administration (MBA) from The Peter Drucker School of Management at Claremont Graduate University. He is licensed as a Certified Public Accountant (CPA, inactive) and a Certified Insolvency & Restructuring Advisor (CIRA). He is an active member of the Association of Insolvency & Restructuring Advisors (AIRA) and the American Institute of CPAs (AICPA).

  • Interim CFO to a food manufacturer facing serious operational issues after losing its largest customer. He successfully reduced operating expenses and cash burn while negotiating with major vendors and the Company’s lender to extend their runway.
  • Officer for a leading cancer research institute where he was responsible for all finance and accounting related activities during a Ch. 11 bankruptcy and associated sale.
  • Financial advisor to large retail chain facing serious liquidity and liability issues. Communicated with all constituents, negotiated landlord concessions, and managed cash while we prepared for bankruptcy filing and associated liquidation sales.
  • Served as a financial advisor to a national ambulance company through a prepacked Chapter 11 bankruptcy that reduced balance sheet obligations by $350 million.
  • Financial advisor to an oil and gas E&P company where we successfully sold assets to strategic buyers, providing needed liquidity to maintain go-forward operations and successfully repay lenders and creditors.
  • Lead a due diligence assessment of a target company for a private equity firm that led to a successful transaction of medical information services provider. After the acquisition, he was further retained to assist in developing the integration plan, including development of various strategic initiatives to improve overall financial performance.

Awards

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Christian Sorensen

Senior Director

Los Angeles, CA

BiographyNotable AssignmentsMedia & Awards

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Industry Expertise

Christian Sorensen, a Senior Director at SierraConstellation Partners, provides operational and financial restructuring and advisory services to both underperforming companies and companies in transition. He has experience with in- and out-of-court restructurings, operational turnarounds/improvement, balance sheet restructurings, debt and equity capital raising, mergers and acquisitions, divestitures, and conducting financial modeling and forecasting.

Christian has experience in a variety of industry verticals, including: aerospace and defense; agriculture; automotive; business services; consumer; food and beverage; healthcare; gaming, lodging and leisure; industrial and manufacturing; media and entertainment; oil and gas; restaurants; retail; technology; and transportation and logistics.

Prior to joining SCP, Christian worked at Sun Capital Partners, an operationally-focused middle-market private equity firm that invests in companies that are operationally challenged, experiencing an industry or business transition, undergoing a corporate divestiture, or managing rapid growth, with over $9 billion of capital under management. At Sun Capital Partners, Christian focused on analyzing control equity investment and divestiture transactions, and actively worked with executive management teams to drive performance improvement of portfolio companies. Prior to Sun Capital Partners, Christian worked at the investment bank Imperial Capital, where he focused on restructuring, financing, and M&A transactions.

In 2019, Christian won the M&A Advisor’s Annual Turnaround Award for Restructuring of the Year of between $25-$50 million for his work with the Cranberry Growers Cooperative.

In 2021, Christian received the M&A Advisor’s Emerging Leader Award, which recognizes leading M&A, financial and turnaround professionals who have reached a significant level of success while still under the age of 40.

Christian holds an Honors Business Administration degree from the Richard Ivey School of Business at the University of Western Ontario, where he graduated with Distinction.

  • Financial advisor and part of team that served as Chief Restructuring Officer to cooperative of cranberry growers, which successfully implemented a Chapter 11 Plan of Reorganization. SCP's solutions identified and implemented operational changes to reduce costs by over 20% and improve production yields by over 10%, while providing secured lenders full recovery. The transaction also received a Turnaround Award by The M&A Advisor for restructuring of the year.
  • Financial advisor and part of team that served as Chief Restructuring Officer to agriculture and commodities company during its Chapter 11 bankruptcy restructuring. Executed an orderly sale of all inventory, monetized certain contract assets, and sold individual operating facilities via court-approved Section 363 asset sales to maximize recoveries.
  • Financial advisor to consumer packaging business with over $140 million of indebtedness following events of default. Developed and implemented cash management solution, identified operational changes to reduce working capital accounts and increase cash conversion, and provided strategic review of alternatives.
  • Financial advisor to diversified manufacturing company with prior year revenue of over $700 million, including developing plant idling plans and identifying and implementing operations changes to reduce quarterly cash burn by over $5.0 million, while achieving a successful refinancing.
  • Worked with leading global manufacturing company on key operational enhancement initiatives to generate over $30 million of EBITDA improvement, and sell non-core assets.
  • Led approximate $100 million acquisition of North American manufacturing company. Worked with executive management teams to identify cost savings and synergies across various departments to enhance EBITDA by approximately 50%.
  • Evaluated in- and out-of-court restructuring alternatives to maximize shareholder value for an aerospace company. Negotiated senior debt purchase, and subsequent stalking horse purchase agreement and credit bid in a Chapter 11 §363 asset sale.
  • Closed over $7.0 billion of restructuring, financing and M&A transactions.

Awards

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Philip Kaestle

Managing Director

Seattle, WA

BiographyNotable AssignmentsMedia & Awards

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Industry Expertise

Philip Kaestle is a Managing Director at SierraConstellation Partners, where he provides financial and operational advisory services to companies in transition. He has experience with balance sheet restructurings, interim executive management, operational turnarounds, identifying strategic opportunities, debt and equity capital raising, mergers and acquisitions, financial modeling and forecasting. Philip has worked in a variety of industries, including aerospace, apparel, automotive, distribution, entertainment, food and beverage, healthcare, industrial services, manufacturing, marketing, media, real estate, restaurants, retail and software.

Philip has served in a variety of senior-level positions including Chief Restructuring Officer, Financial Advisor, Investment Banker, Interim Chief Financial Officer, Interim President and Liquidating Trustee to numerous middle-market companies and is particularly skilled at assisting clients through challenging situations.

Prior to joining SCP, Philip was an associate vice president in OneWest Bank’s Media and Entertainment Finance Group where he was responsible for structuring, underwriting and executing new senior debt transactions and recapitalizations for media and entertainment companies. He was also a senior financial analyst in OneWest Bank’s Commercial Real Estate Group, responsible for managing and liquidating non-performing real estate assets.

Before joining OneWest Bank, Philip was an associate at Arch Bay Capital, a Southern California-based real estate investment fund. He started his career as an investment banking analyst with Imperial Capital, LLC in Los Angeles.

In 2020, Philip received the M&A Advisor’s Emerging Leader Award, which recognizes leading M&A, financial and turnaround professionals who have reached a significant level of success while still under the age of 40. In 2022, Philip was named to the Turnaround Management Association Northwest Chapter Board of Directors.

Philip holds a Bachelor’s degree in Financial Economics from Claremont McKenna College and is one of the co-leaders of the Claremont McKenna College Seattle Alumni Chapter.

  • Chief Restructuring Officer to a producer and processor of dried fruits where significantly improved liquidity and profitability, sold non-strategic real estate to reduce leverage and conducted a competitive a refinancing process which resulted in full repayment to the senior lender despite ongoing litigation between the company and the same lender.
  • Liquidating Trustee and Chief Restructuring Officer to a distributor of alcoholic and non-alcoholic beverages where he raised senior debt through a refinancing of the company's credit facility, then sold the assets of the company through a competitive process and completed the wind down despite ongoing litigation between the two shareholders.
  • Interim President and Chief Financial Officer to a dental laboratory manufacturing company where he rebuilt management and finance teams and significantly reduced operating expenses through a series of strategic initiatives despite a volatile operating environment.
  • Chief Restructuring Officer to a clinical-stage biopharmaceutical company which filed for Chapter 11 as a lawsuit with a former co-development partner was coming to a head. SCP led a settlement negotiation to resolve the litigation and completed an orderly wind down of the business, which resulted in full repayment to the pre- and post-petition lenders.
  • Chief Restructuring Officer and Interim Chief Financial Officer to an ethnic grocery store chain. Key responsibilities included cost reductions, vendor relations and cash management. He implemented a $12 million restructuring within a three-month timeframe which stabilized the business and allowed for a sale and subsequent recapitalization.

Media

Awards

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Bob Riiska

Managing Director

Los Angeles, CA

BiographyNotable AssignmentsMedia & Awards

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Industry Expertise

Robert O. Riiska, a Managing Director at SierraConstellation Partners, has over 25 years of turnaround and advisory experience, including serving in interim senior management capacities for clients and performing numerous value-added consulting assignments. Clients have included multigenerational family businesses, sponsor-backed roll-ups and large publicly traded corporations.

Mr. Riiska is a Certified Turnaround Professional (CTP), Certified Public Accountant (CPA) and Chartered Global Management Accountant (CGMA). He received a Bachelor of Science Degree in Economics from the Wharton School of the University of Pennsylvania, and an M.B.A. in Finance and Marketing from the University of Chicago Booth School of Business.

Mr. Riiska serves on the boards of several leading industry associations including the Executive Committee of the Turnaround Management Association’s Southern California Chapter, the Advisory Board of the American Bankruptcy Institute’s Bankruptcy Battleground West and as a Secured Finance Network member director.

In 2019, Mr. Riiska received the Turnaround Atlas Award for his work as Chief Restructuring Officer of LORAC Cosmetics prior to joining SCP in 2018.

Mr. Riiska’s recent engagements have been in diverse industries, including automotive dealerships, transportation, furniture manufacturing and retailers, apparel, mining, cryptocurrency lending, nonprofits, consumer products, restaurants and industrials.

  • Served as CRO of a gold mine located in the Southwest U.S., spearheading out-of-court restructuring efforts which led to a successful sale.
  • Served as financial advisor to a manufacturer and distributor of commercial office furniture, negotiating a forbearance agreement which would give the company sufficient operational runway to recover from the issues mainly caused by the pandemic.
  • As CRO of a prestige cosmetics company based in Los Angeles, oversaw all aspects of day-to-day operations, including directly interfacing with large national retailers and suppliers, and developing and executing liquidation strategies for excess inventory, while also coordinating successful sale efforts.
  • As financial advisor to a consumer packaging company, negotiated a new financing solution to provide liquidity to maintain core operations and pursue growth initiatives, while also achieving a successful sale of one of the divisions in an expedited timeframe.
  • As financial advisor to a $500 million long-haul trucking company, developed a successful turnaround plan and convinced the lenders to provide a significant structured loan overadvance to facilitate execution of the plan.
  • Served as financial advisor to a $300 million family-owned grocery wholesaler and developed a comprehensive turnaround plan to return the business to profitability.
  • Served as CRO of a $900 million publicly-traded staffing company with over 30,000 temporary employees. Successfully sold several business units after a massive tax fraud related to an affiliated company had been discovered.
  • Acted as Financial Advisor to one of the largest manufacturers of recreational vehicles while it operated in Chapter 11, leading to a successful asset sale.

Media

Awards

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Kevin Santos

Director

San Francisco, CA

BiographyNotable AssignmentsMedia & Awards

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Industry Expertise

Kevin Santos, a Director at SierraConstellation Partners, provides financial and operational advisory services to underperforming companies and companies undergoing transition. His over seven years’ experience includes in- and out-of-court restructurings, operational turnarounds, transaction advisory services, and conducting financial modeling and forecasting.

Kevin has experience in a variety of industry verticals, including construction, consumer retail, business services, distribution, food and beverage, industrials and manufacturing, media and entertainment, pharmaceuticals, and technology.

Prior to joining SCP, Kevin co-founded a finance and accounting solutions firm where he focused on building offshore full-service accounting teams that supported US-based companies. He was also a Senior Financial Analyst at a private roofing & solar construction firm where he supported restructuring efforts, developed and maintained financial models, and led an ERP implementation. Kevin started his career as a Financial Analyst at a public global media company, where he managed financial reporting of new and existing film, television, and online media production and distribution products.

In 2021, Kevin won the 15th Annual M&A Advisor Turnaround Award under the category of ‘Information Technology Deal of the Year’ for his work with Wave Computing.

Kevin received his Bachelor of Science degree from the University of California, San Diego, where he majored in Management Science. He also successfully completed ACG’s Middle-Market Certification program. Kevin grew up in the Philippines and currently lives in the San Francisco Bay Area with his wife and dog.

  • Chief Restructuring Officer Support to a wholesale distributor of beer, wine, spirits, and non-alcoholic beverages where he assisted the CRO in raising senior debt through a refinancing of the company’s credit facility, then sold the assets of the company to one of the world’s largest brewing companies in a competitive process. He also assisted in maintaining the 13-week cash flow model, conducted extensive inventory analyses, and supported transaction diligence.
  • Financial Advisor Support for a consumer products company where he developed the 13-week cash flow model, supported a Series F equity raise along with a refinancing of an ABL facility.
  • Chief Restructuring Officer Support to a publicly traded clinical-stage biopharmaceutical company which filed for Chapter 11 bankruptcy. Supported the SCP team in settlement negotiations, created and maintained the 13-week cash flow model, and is in the process of effectuating an orderly wind down of the business, which has since resulted in full repayment to pre- and post-petition lenders.
  • Chief Restructuring Officer Support for Wave Computing, Inc. in their Chapter 11 reorganization. Responsibilities include maintaining 13-week cash flow, financial model projections, case management, and overall bankruptcy support.
  • Chief Restructuring Officer Support for a business services company in an accelerated private sale process. He developed and maintained the 13-week cash flow model, and supported the sale process including transaction diligence.
  • Financial Advisor Support for a medical device manufacturer that effectuated an Article IX foreclosure to the senior secured lender. Responsibilities include creating and maintaining the 13-week cash flow model, creating forecast models, and transition services.
  • Financial Advisor Support of a data center and fiber-to-the-home outsourced service provider.

Awards

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Curt Kroll

Partner

St Louis, MO

BiographyNotable AssignmentsMedia & Awards

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Curt Kroll, a Partner at SierraConstellation Partners, provides interim management and operational and financial advisory services to underperforming companies and companies in transition. His experience includes challenging CRO roles, interim management, refinancings, distressed acquisitions and in- and out-of court restructurings. Mr. Kroll has held roles in various industries including retail, industrial manufacturing, real estate, financial services, and healthcare.

Prior to joining SCP, Mr. Kroll was the Chief Financial Officer and Chief Information Officer at Katy Industries, Inc., a publicly-traded manufacturer of consumer and industrial products with operations throughout the United States and Canada. While at Katy, he worked on numerous refinancings, acquisitions, operational integrations, and restructuring transactions. Prior to Katy, Mr. Kroll was a manager at Deloitte where we worked with middle-market and corporate clients across industries. Prior to Deloitte, he also spent 3 years in a regional public accounting firm working with middle-market companies.

In 2022, Curt won the M&A Advisor’s 16th Annual Turnaround Award (between $10mm and $100mm) for his work on the turnaround of francesca’s.

Mr. Kroll holds both a bachelor’s and master’s degree in accountancy from the University of Missouri. He is licensed as a Certified Public Accountant (CPA Inactive).

  • Served as CFO of a publicly traded-consumer product manufacturing company where he lead the company through a restructuring process that ultimately led to a return to investors through the sale of the business.
  • Served as a financial advisor to a $500 million outsourcing company through a sale process to a private equity group.
  • Served as a financial advisor for a $600 million oil and gas pipe manufacturer in a refinancing of its debt.
  • Served as a CRO to a $700 million national retail chain during its restructuring process.
  • Interim Chief Financial Officer to a national bridal retail company where he led the team post-bankruptcy to rebuild the Company’s brand image, employee morale and trust with key stakeholders including the debt holders.
  • Chief Restructuring Officer and Interim Chief Financial Officer to a national retail company where he executed a series of cost reductions and operational improvements to increase profitability despite a challenging operating environment. He also assisted with the sale of the company.
  • Was interim CFO to an 80-store candy retailer.
  • Served as a financial advisor to several clients within the healthcare industry on capital bond issuances raising over a billion dollars in capital.

Awards

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Norpac Foods, Inc.

Situation

  • NORPAC Foods, Inc, was an Oregon-based farming cooperative specializing in frozen vegetables, generating over $300 million in annual revenue.
  • Inefficient operations, underinvestment into fixed assets at its production facilities, and limited inventory control led to significant operating losses: $100+ million over a 5-year period.
  • Deteriorating liquidity led to multiple forbearance agreements on its $125 million senior secured bank debt.
  • Following an unsuccessful sale process, SCP was retained as Chief Restructuring Officer in June 2019 to evaluate strategic alternatives and negotiate with the senior secured lender.

SCP'S SOLUTION

  • SCP immediately instituted a 13-week cash flow budget and implemented a tight expense management policy to maximize the liquidity runway.
  • Replacing the incumbent investment bank, SCP re-engaged with potentially interested parties to negotiate a sale and repay the senior debt.
  • SCP supported all day-to-day operations of the business, negotiated with various vendors, and reduced costs in an effort to extend the timeline for a strategic sale.
  • Within two months, an agreement was reached with Oregon Potato Company (OPC) to acquire substantially all assets of NORPAC through a 363 sale via a Chapter 11 bankruptcy.
  • NORPAC filed for Chapter 11 protection on August 22, 2019.

RESULTs

  • Ultimately, NORPAC assets were sold via a two-step transaction: business operations were acquired by OPC and most of the real estate was acquired by Lineage Logistics.
  • Despite OPC terminating its original stalking-horse bid, SCP was instrumental in managing a highly-successful in-court auction process. The senior secured debt was fully paid off and the case avoided a conversion to a Chapter 7. 
  • The majority of NORPAC’s processing plants continued their operations, and an estimated 1,900 jobs were be preserved.
  • Furthermore, SCP supported the integration process and an orderly wind down of the remnant estate.
  • A Plan of Liquidation was approved in November 2020, and a meaningful (30-35%) recovery to unsecured creditors was expected. 
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Pacific Ethanol, Inc.

(Now known as Alto Ingredients, Inc. – NASDAQ: ALTO)

Situation

  • Pacific Ethanol (now known as Alto Ingredients) is a publicly-traded producer of specialty alcohols, with operations in Illinois and the West Coast. Revenue in 2019 was $1.4 Billion.
  • Pre-COVID, Pacific Ethanol was already experiencing significant margin compression related to its core product, ethanol.
  • As COVID lockdowns expanded nationwide and gasoline demand crumbled, ethanol prices collapsed to the point where gross margins on ethanol production turned negative.
  • Pacific Ethanol reported a Q1 2020 EBITDA loss of $12 million. Poor financial performance resulted in covenant violations with its secured lenders.
  • SCP was engaged as Chief Restructuring Officer in March 2020, tasked with spearheading negotiations with secured lenders and developing a viable turnaround plan for the business.

SCP'S SOLUTION

  • SCP immediately engaged in discussions with the Board and management to idle unprofitable plants – particularly on the West Coast – and to significantly reduce spend on personnel and trade in order to preserve liquidity.
  • Simultaneously, SCP induced management to refocus operations on higher-margin products. A rapid operational shift enabled the company to significantly benefit from soaring demand for hand sanitizers. 
  • To alleviate concerns from secured lenders, SCP re-engineered Pacific Ethanol’s financial model to reflect a fundamental change in operations, demonstrating sufficient liquidity to begin paying off debt.
  • Furthermore, in order to reflect the paradigm shift of Pacific Ethanol, the Board promoted the Chief Operating Officer to Chief Executive Officer and allowed the founder (focused on ethanol) to retire.

RESULTs

  • Pacific Ethanol’s EBITDA jumped from negative $12 million in Q1 to positive $29 million in Q2 and positive $34 million in Q3 2020.
  • In conjunction with its shift toward higher-quality alcohols, Pacific Ethanol began selling its ethanol-focused plants, using the proceeds to paydown debt.
  • Strong operational and financial performance also allowed the company to tap equity markets, raising $75 million in Q4 2020.
  • As a result, SCP was able to broker a debt restructuring deal with its secured lenders, which provided for a rapid reduction in loan balances and a waiver of all defaults. During 2020, Pacific Ethanol was able to reduce its loan balances from ~$245 million to ~$100 million.
  • Pacific Ethanol was guiding toward being net term debt free by the end of 2020.
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Cranberry Growers' Cooperative (CranGrow)

Situation

  • Wisconsin based cooperative of cranberry growers producing sweetened dried cranberries and cranberry by-products (primarily concentrate) experienced liquidity constraints driven by lack of sales/inventory build, undercapitalization and operating inefficiencies.
  • Growers had received minimal payments for crops delivered to the cooperative the last two years.
  • SCP was retained to serve as Chief Restructuring Officer to develop a cash flow forecast, recommendations for operating improvements, and strategic alternatives to maximize recoveries to all stakeholders following defaults under the secured loans.

SCP'S SOLUTION

  • Developed weekly cash flow, operating budget, and review of strategic alternatives to negotiate a forbearance with the senior lender, providing additional liquidity (over-advance) to maintain normal business operations.
  • Identified and implemented operational changes to reduce costs by over 20% and improve production yields by over 10%.
  • Executed a service agreement with a strategic to acquire all production of the facility, doubling monthly sales on a per pound basis and increasing the achieved sales price per pound by approximately 15% to provide near-term liquidity as a broader deal could be structured.
  • Filed CranGrow for Chapter 11 bankruptcy to protect specific assets of the cooperative, and against a hostile shareholder.
  • Negotiated upfront payment to growers for a portion of their contributed 2017 crop to assist with their liquidity needs.

RESULTs

  • Negotiated and obtained debtor-in-possession and post-emergence financing from CranGrow’s existing secured lender.
  • Achieved confirmed Chapter 11 Plan of Reorganization, protecting jobs of all permanent employees and a full recovery of secured obligations.
  • Negotiated creative structure whereby strategic entered a long-term lease of the assets to repay the secured obligations and fund the administrative expenses of the cooperative, while maintaining valuable assets and being the exclusive supplier to the production facility.
  • Maintained a core group of growers to ensure supply to the facility on an ongoing basis.
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Wholesale Distributor Of Beverages

Situation

  • Wholesale distributor of beer, wine, spirits, and non-alcoholic beverages located in the state of Washington.
  • Company had exclusive license and distribution agreements with Anheuser-Busch and several other beverage suppliers.
  • Historically, this was a 51% owned and operated family business with a 49% ownership interest held by an affiliate of Anheuser-Busch.
  • Several legal disputes occurred, including judgments placed against the family-owned LLC by relatives of the manager for non-payment of a loan, as well as a lawsuit between Anheuser-Busch and manager for alleged breach of contract and self-dealing.
  • Anheuser-Busch exercised its rights to appoint SCP as Liquidating Trustee under Crown’s Operating Agreement. SCP’s Philip Kaestle was appointed and charged with maximizing the value of the Company to wind up the LLC (via a sale). The District Court for the Western District of Washington enjoined the Manager from interfering with the Liquidating Trustee.

SCP'S SOLUTION

  • At the outset of the engagement, Comapny was in default with its senior secured ABL. SCP ran a robust refinancing process and was able to attract non-bank and bank offers. The process resulted in a new bank ABL facility which fully repaid the incumbent lender.
  • SCP engaged an industry-specialized investment banker to facilitate a sale process. SCP supported all necessary prep work and initial due diligence while overseeing the Company.
  • The sale process resulted in multiple offers. Anheuser-Busch provided the highest value offer and was selected. SCP worked with the investment banker and counsel to negotiate and execute the Asset Purchase Agreement.
  • SCP managed Company’s response to a significant volume of due diligence requests and other transaction closing requirements.
  • After closing, the SCP oversaw resolution of all post-closing requirements, transaction escrows, and necessary wind-down tasks prior to the formal dissolution of the LLC. 

RESULTs

  • SCP was able to step in and manage a Company that was facing significant internal and external pressures that were materially impacting the performance of the business.
  • The refinancing closed in a timely manner and provided a sufficient liquidity runway to pursue a sale process as a going concern. 
  • The Liquidating Trustee successfully oversaw a fair process and closed on the sale of substantially all the Company’s assets in a value-maximizing transaction that preserved the Company’s operations, employees, customers, and vendor relationships.
  • Shareholder litigation was settled, achieved mutual releases post-closing, and final distributions paid to shareholders and judgment creditors according to their respective legal interests in the LLC.
  • SCP completed the wind-down of the LLC including the full satisfaction of all company obligations.
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Seafood Processing Company

Situation

  • Los Angeles-based $220 million fresh and frozen seafood processing and distribution company that was experiencing significant liquidity issues and eroding lender confidence. AFS was part of Prospect Enterprises, a holding company, that also included a profitable cruise line supply division called Kansas Marine.
  • The majority of Company’s items were being sold at or below cost and the Company was losing money on many of its customers. The Company had expanded its customer base and was not focused on per-customer profitability.
  • The product losses were significantly impacting overall profitability due to the need for more extensive warehousing, trucking, and customer service operations.

SCP'S SOLUTION

  • SCP professionals implemented a financial planning tool to better track and understand performance drivers across all areas of the business and reorganized operations to reduce costs, remove redundancies and rationalize the customer base.
  • SCP professionals recommended and executed an action plan to improve 6 key areas of the business, including: product/item margin management, customer margin management, customer credit, purchasing, human resource management, and production and quality management.

RESULTs

  • Improved LTM EBITDA from negative $5 million (2013) to positive $2 million (2014) and $2.8 million (2015).
  • Along with an investment bank, SCP assisted with the negotiation of a potential partnership and eventual sale to Santa Monica Seafood.
  • Wells Fargo Bank’s loan related to AFS ($14 million) was completely repaid upon the sale of the Company.