Unlike Chapter 7, which, as the reader may know, represents a dead end street for a company, the purpose of Chapter 11 has traditionally been to provide a second chance, preserving value and employment. In a Chapter 11 proceeding, the company is put on life support and protected in an orderly process overseen by the courts. The company owners present a plan of reorganization to the courts and creditors, often including a restructured and reduced debt load. If the plan is confirmed, the company has a clear exit from bankruptcy and drives off into the future, with a full tank of gas, and a renewed scenario for its future prospects.
The lack of Chapter 11 filings in June appears to be the continuation of a long term trend in which owners of smaller companies simply are no longer able to avail themselves of the benefits of the bankruptcy code. Printing company owners, often times entrepreneurs with their life’s work at stake, are avoiding filing for Chapter 11, possibly missing the opportunity to restructure and retain ownership. Nonetheless, for the smaller companies typical of much of the printing industry, this may make a lot of sense. In addition to the expense of professional fees for attorneys, accountants and turnaround professionals, a filing will likely trip defaults in loan covenants, putting additional financial pressure on the company as its lender charges default interest rates and fees. Customers may react by seeking alternative sources for their printing needs, as competitors broadcast the unfortunate company’s new status as debtor-in-possession. When the company is no longer able to service its debt, the lender may begin enforcement of personal guarantees. The pressure mounts, the resources that could have funded a restructuring dwindle and a Chapter 11 filing becomes completely unsustainable. The result is that the company files for liquidation under Chapter 7, the owners hand the keys over to creditors, or they simply close the business and walk away. If there is a residual book of business, the owners find a stronger company in which to “tuck-in” their accounts. Hopefully, the owner has made suitable arrangements with the company’s creditors and is left with some residual value.
Read between the lines throughout the M&A deal log portion of the Target Report each month and you will find that these “tuck-in” deals are well represented. The out-of-gas company goes to the scrap heap of closed printing firms, and the former owner rides off as a passenger in a healthier company, all gassed up and ready to go. Based on the projections for the industry, we expect this trend to continue.
Over in the fast lane, there were some very positive deals by some of the industry’s active players. WS Packaging, with backing from private equity firm, J.W. Childs Associates, L.P, purchased Consolidated Products. Following up on last month’s acquisition of several dozen newspaper properties, Berkshire Hathaway acquired a Texas community newspaper from Evening Post Publishing (for more on the exaggerated reports of the death of printed newspapers, see the May edition of the Target Report).
In an interesting transaction, NewPoint Media Group, with private equity backing from Lion Equity Partners, acquired several specialty publication titles serving targeted segments of the real estate market. As if betting against the tide in real estate was not enough, NewPoint Media doubled down and also acquired the seller’s printing division.
The paper industry continued shuffling pieces around on the chess board. International Paper, responding to its settlement with the U.S. Department of Justice, divested three mills in two separate transactions. Central-National-Gottesman, owner of the Lindenmeyr paper distribution company, added two more distributors to its portfolio, Spicers Paper and Kelly Paper, both with headquarters in California.
In two other notable transactions that demonstrate the continued transition by content creators from ink-on-paper to electronic media, Teldon sold its Print Media Group to Mitchell Press, and Cox Target Media purchased Savings.com, augmenting its Valpak printed coupons with an online coupon service.
| 2012 June - Mergers and Acquisitions in the Printing, Packaging, Paper & Related Industries | |||||||||||||
Deal Party #1 (Surviving Entity) |
Pre-Deal Revenues ($Mil ) |
Party #1 Address |
Deal Party #2 |
Pre-Deal Revenues ($Mil ) |
Party #2 Address |
Date Deal Public |
Deal Value ($Mil) |
Deal Structure (Intermediary) |
Notes |
Press Releases |
|||
| NewPoint Media Group | No Data | Lawrenceville, GA | Network Communications | No Data | Norcross, GA | 6/28/12 | No Data | Asset Acquisition | Pub titles & printing facilities. | Link | |||
| Central National-Gottesman | No Data | Purchase, NY | Spicers
Paper Kelly Paper |
$500.0 | Santa
Fe Springs, CA City of Industry, CA |
6/26/12 | No Data | Acquisition | Paper Distributors | Link | |||
| RockTenn | $5,400 | Norcross, GA | Mid South Packaging | No Data | Cullman, AL | 6/25/12 | No Data | Acquisition | Corrugated Packaging | Link | |||
| Cox Target Media | No Data | Largo, FL | Savings.com | No Data | Los Angeles, CA | 6/21/12 | No Data | Acquisition | Online coupons | Link | |||
| Frazier
Healthcare (Packaging Coordinators - "PCI") |
No Data | Seattle, WA | Catalent Pharma Solutions | No Data | Philadelphia, PA | 6/20/12 | No Data | Acquisition - Partial | Pharma Packaging | Link | |||
| Mitchell Press | No Data | Vancouver, BC | Teldon Print Media | No Data | Vancouver, BC | 6/19/12 | No Data | Acquisition | Divestiture of Print Operations | Link | |||
| Berkshire Hathaway | $143,688 | Omaha, NE | Evening Post Publishing | No Data | Charleston, SC | 6/12/12 | No Data | Acquisition - Partial | 1 community newspaper in TX | Link | |||
| WS Packaging Group | No Data | Green Bay, WI | Consolidated Products | No Data | Knoxville, TN | 6/4/12 | No Data | Acquisition | Labels & tags | Link | |||
| Colorfx | $74.8 | Des Moines, IA | Acme Printing | No Data | Des Moines, IA | 6/4/12 | No Data | Acquisition | Commercial printing | Link | |||
| Pro Print | No Data | Duluth, MN | Christie Printing | No Data | Duluth, MN | 6/4/12 | No Data | Merger | Commercial printing | Link | |||
| New-Indy Containerboard | No Data | Foxborough, MA | International Paper | $26,034 | Memphis, TN | 6/4/12 | No Data | Asset Acquisition | 2 Containerboard paper mills | Link | |||
| Hood Companies | No Data | Burlington, ON | International Paper | $26,034 | Memphis, TN | 6/4/12 | No Data | Asset Acquisition | 1 Containerboard paper mill | Link | |||
| Sir Speedy of Westbury | No Data | Westbury, NY | Performance Printing & Graphics | No Data | Massapequa, NY | 6/1/12 | No Data | Acquisition | Commercial print & copy. | Link | |||
| 2012 June - Bankruptcy Filings in the Printing, Packaging, Paper & Related Industries | ||||||||||||
Filing Party |
Date Case Filed |
Pre-Petition Revenues ($Mil ) |
Case # |
Filing Party Address |
Circuit |
Region & City |
Judge |
Attorney for Debtor |
Notes |
|||
| Chapter 11 Filings: | ||||||||||||
| No Chapter 11 Filings Found this Month | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| Chapter 7 Filings: | ||||||||||||
| InkOne Communications, Inc. | 6/29/12 | No Data | 12-66277 | Smyrna, GA | 11th | Northern
GA Atlanta, GA |
Barbara Ellis-Monro | Evan M. Altman | Commercial Printing & Repro | |||
| Watermarc Graphics, Inc. | 6/12/12 | No Data | 12-25050 | Scotch Plains, NJ | 3rd | New
Jersey Newark, NJ |
Rosemary Gambardella | Karen E. Bezner | Commercial Printing | |||
| International Graphic Equipment LTD. | 6/26/12 | No Data | 12-55293 | Brownstown, MI | 6th | Eastern
MI Detroit, MI |
Phillip J. Shefferly | John C. Lange | Graphic Equipment Dealer, New & Used | |||
| M&J Printing Solutions, Inc. | 6/4/12 | No Data | 12-91591 | Riverbank, CA | 9th | Eastern
CA Modesto, CA |
Ronald H. Sargis | Axel B. Gomez | Printing & copying | |||
