When changing times and technology outpace your product

How advisory helped a bankrupt manufacturer maintain liquidity and restructure approximately $350 million in liabilities


Management had a problem, we provided options and helped them navigate through the process.

In a decades-old glassmaking plant in the United States, a team of executives watched glass components moving along a precise assembly line, knowing they had to shut it down.

The story was familiar enough: Changing times and technologies had outdated the company's end product — cathode ray tube (CRT) devices. With that, the specialized line of glass panels and funnels the company manufactured had lost its reason for being.

"The question was how long the US manufacturers were going to continue to make CRT televisions," recalled PwC corporate finance and advisory director, Keith Kaiser. "The estimate was that within four years, those companies would all go away."

The privately-held manufacturer, acquired in the 1980s by an Asian conglomerate, had been in the glass business for the better part of a century and operated several plants in the US. But as consumer and business preferences turned rapidly away from CRT screens and toward flat-screen liquid crystal and plasma displays, the company found itself deeply in debt and mired in a dying business.

"The subsidiary had become a financial drain on the parent," said Kaiser. "Management knew they had a problem. What they weren't sure of was exactly how to solve it."

Having already decided to shut down all three of the company's US manufacturing facilities, executives from the parent company, who had been brought in to wind down the subsidiary, still faced a number of issues. They were concerned about disrupting the flow of product to the remaining customer base, and there were significant debts and pension liabilities to be reconciled. So they reached out to PwC for help.

"We started out by asking the management team what they wanted, ideally, to accomplish," said Kaiser. "They told us they'd like to be a distribution business and supply the products from Japan, but hadn't thought it was possible."

PwC specialists helped the company evaluate its options and execute a plan that included Chapter 11 bankruptcy for the manufacturing subsidiary. Negotiating from within the jurisdiction of bankruptcy court, PwC helped the company restructure approximately $350 million in liabilities, conduct a facility sale, and put in place a $25 million "debtor in possession" financing to ensure the manufacturer's liquidity for the duration of the bankruptcy proceedings.

This strategy enabled management to transition the business from a moderately-sized manufacturer of CRT glass to a small distributor of similar components manufactured elsewhere. Along the way, the company saved significant costs and provided uninterrupted service to those customers who continued to rely on glass components for CRT devices.

"Because the local market was rapidly declining for this company, continuing to manufacture in the US simply wasn't efficient," Kaiser explained. "Now, the company's business is scalable. As the market goes away, they can exit the business in an orderly manner."

"We were able to help because we've been through this so many times before," said Kaiser. "Often, companies aren't aware of the alternatives available to them. Our experience helps us identify a thorough resolution so that at the end of the day, you've got a sustainable business.