Case Study

Foss Manufacturing

CLIENT: U.S. Trustee to the Foss Manufacturing Estate

Gordian Group acted as financial advisor to the U.S. Trustee to the Foss estate in connection with the sale of the Company to a private equity fund through a successful 363 auction.

Business Profiles

Situation

Foss Manufacturing was a leading producer of fiber and nonwoven products for distribution to retailers and equipment manufacturers located throughout the United States and abroad, with a significant portion of sales to the automotive industry. Prior to, and throughout Gordian Group’s engagement as investment banker to Foss, the Company experienced significant profitability degradation. Foss filed for bankruptcy protection in September 2005 as a result of declines in operating performance and extensive turmoil surrounding accounting fraud, which ultimately led to defaults under its senior credit facility.

Engagement

Gordian Group was engaged by the U.S. Trustee to the Foss estate in December 2005 to run a marketing process for the ultimate sale of the assets through a Chapter 11 363 auction or plan of reorganization.

Outcome

Despite a recent historical lack of profitability, an operating loss of $345,000 for the first quarter of 2006, and the expedited nature of the sale process, Gordian Group was able to establish a stalking-horse bidder and successfully sell the Company to a private equity fund. The Foss Manufacturing Company estate received consideration of approximately $39 million, and the senior creditors received recovery in full;an outcome nobody could have foreseen at the commencement of Gordian’s engagement.