Case Studies

Wind-down of Cheese Processing Plant

J.S. Held Acquires Clark Seif Clark, Strengthening West Coast Capabilities for Environmental Claims, Disputes, and Catastrophe Response

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Home·Wind-down of Cheese Processing Plant

The Situation

$300 million Cheese Processing Operation. Our experts were engaged as Financial Advisors.

  • The Company operated the largest cheese processing facility in the United States; however, population growth in California had absorbed the land surrounding the facility, forcing milk to be shipped from further and further away.
  • Due to the increasing freight costs, the plant was losing $30 million per year.
  • In addition to the freight issues, the facility was party to a long-term contract (12 years remaining) with ComEd (regional power company) to utilize the excess steam from the co-located power generation facility as part of the cheese manufacturing process.
  • Terminating the contract would cost in excess of $125 million.

How We Advised

Our experts were hired to develop an economical wind-down plan to minimize the cost to the company.

  • Negotiations with the power company rendered no simple solutions.
  • Our experts brought in their energy contract specialist to look at alternative uses for the steam.
  • It was deemed that the steam could be channeled into a disbursement trench that would be monitored by the local EPA.
  • The steam trench was completed in 90 days, and ongoing monitoring was established at a nominal annual cost of $1 million.
  • The company was able to halt production at the facility and ended the ongoing annual losses of $30 million, which had been increasing each year.
  • The contract with the energy company was modified for the alternative disposition of the steam, saving the Company $125 million in contract penalties.
  • Ultimately, the Company saved $360 million in losses and mitigated $125 million in contractual obligations.

Key Contact

Dan F. Dooley, CTP 
Senior Managing Director 
Strategic Advisory Practice 
+1 603 660 8952 
[email protected] 

Related Practice Areas

> Out-of-Court Wind-downs 
We deliver strategic guidance through the wind-down of business operations or underperforming assets, helping preserve value and reputation while avoiding the disruption, cost, and public scrutiny of formal bankruptcy. Our expert financial and operational advisors apply decades of experience providing exit solutions across a wide range of industries and complexities to deliver, and often execute, comprehensive solutions for distressed businesses. 

 

> Turnaround and Restructuring Services 
Navigating the many challenges confronting a company in transition requires an operationally focused approach that looks beyond the balance sheet to minimize further degradation and build a path to sustainable growth. Drawing upon decades of experience in the turnaround space, we help companies in transition identify practical strategies to improve profitability and liquidity for immediate relief, while concurrently developing and executing a comprehensive turnaround plan for long-term, sustainable value creation. 

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