CHICAGO, Sept. 28 /PRNewswire-USNewswire/ -- In 2009, corporate restructuring talent helped save the companies involved with Twinkies, the plastic in soda bottles, and the equipment that often stores these products, and contributed as well to other turnaround successes. The 11 professionals who made this happen did so in spite of the economic downturn, a pervasive credit crisis, and the legal obstacles to restructuring created in the wake of bankruptcy legislation. They are recipients of the Turnaround of the Year and Transaction of the Year Awards from the Turnaround Management Association (TMA), the only international non-profit association dedicated to corporate renewal and turnaround management.

These winners will be honored during the October 8 keynote luncheon at the TMA Annual Convention, October 7-9, at the J.W. Marriott Desert Ridge, Phoenix, Arizona:

Turnaround of the Year Awards for individuals or teams who orchestrated the most successful turnaround in these categories:

Large Company Turnaround ($300 million USD or greater in revenue): Wellman Inc. Jonathan S. Henes, Kirkland & Ellis LLP, led the turnaround team.

Wellman Inc., a South Carolina-based manufacturer, was the second largest United States producer of PET resin, used mainly in plastic beverage bottles, and polyester fiber, used in apparel and home furnishings. Wellman sold its products in a market in which it differed little from its competitors and, by Fall 2007, faced significant financial problems. Kirkland & Ellis and Lazard, Freres & Co., LLC helped the company determine that a chapter 11 filing was in its best interest.

After several setbacks, the team helped Wellman streamline operations around its core strength, PET resin, and painfully exit the others, necessitating significant job losses. But, by the end of January 2009 Wellman successfully emerged from bankruptcy stronger than when it entered it. The company substantially reduced its funded debt to $125 million and was able to obtain exit financing and new money investment. As the judge in the case, Hon. Stuart M. Bernstein, U.S. Bankruptcy Judge for the Southern District of New York, declared, "...As far as I'm concerned, this case is a poster child for what Chapter 11 is supposed to be."

Mid-size Company Turnaround (Revenue between $50 million and $300 million USD): Gerber Plumbing Fixtures LLC. The turnaround team included:

    --  Mitchell B. Rasky, team leader, The PrivateBank
    --  Steven Buford, Bank of America
    --  Robert Corsentino, The PrivateBank

    --  Michael Werner, CEO, Globe Union Group Inc.

From its founding in 1932 until it faced bankruptcy and liquidation in 2002, Gerber Plumbing Fixtures Corp., was a family-owned plumbing manufacturer and distributor in Chicago, Illinois. Its branded toilets and faucets were well known and highly regarded by the trade, and for many decades the business was very profitable. However, by not making the strategic changes necessary to compete in a global economy, Gerber began to see its profits circling the drain. The company was days away from liquidation by its banks when Globe Union, an Asia-based, private label plumbing manufacturer led by Michael Werner, offered Gerber a bridge loan to forestall foreclosure and, by acquiring Gerber's assets, name and established distribution, saved the Gerber brand and turned Globe Union into a global competitor in the kitchen and bath market.

Between 2003 and 2008 Werner and Globe Union globalized manufacturing to reduce costs and improve quality, while maintaining a presence in North America. By introducing hundreds of products, including new 'green' water-saving faucets and toilets, they revitalized product development. They raised Gerber's profile even more among plumbing professionals and led Gerber into the hospitality, commercial and residential builder markets. Now, in spite of four years of a depressed housing market in which sales of its competitors have been lagging, Gerber's sales have increased by nearly 20%.

Small Company Turnaround (Revenue of $50 million or less USD): Commercial Foodservice Repair, Inc. Kurt Herwald, CTP, Chandelle Advisors Limited, led the turnaround team.

Commercial Foodservice Repair, Inc., headquartered in Greenville, South Carolina (CFR), installs, maintains and repairs foodservice equipment nationally. Customers are primarily chains of retail stores and restaurants or their franchises. In 1990, its acquisition of a significant portion of 7-Eleven's in-house service operations made CFR into one of the largest service providers to the convenience store industry, but it also brought problems of scale into the service mix. Starting in the late 1990s, the company was experiencing losses of more than $100,000 per month before interest charges, debt was more than $8 million, accounts payable were past due, management was in disarray, and liquidation seemed the best solution.

Rebuilding fundamental business practices and processes is usually beyond the scope of most turnarounds, more so when the business is a pure service company. Chandelle Advisors was retained by CFR in mid-2004 for what was only to be a six-month engagement, but eventually committed to a longer term. Initially, the team concentrated on improving fundamental service quality, then began to gain control of CFR expenses, improve the quality and perception of its services, and take a hard line on unprofitable parts of the company. Successful turnarounds in the service industry are rare compared to other sectors. This one proved that the most critical element of a turnaround in the service sector is to first ensure the company's service is of high quality, a point often overlooked in the financial analysis.

Transaction of the Year Awards for individuals whose teams have orchestrated the transaction (non-operational restructuring) with the greatest impact in this category:

Large Company Transaction ($300 million USD or greater in revenue at time of transaction): Interstate Bakeries Corporation. Robert A. Campagna, primary financial advisor, Alvarez & Marsal North America, LLC

    --  J. Eric Ivester, counsel, Skadden, Arps, Slate, Meagher & Flom LLP

    --  Lloyd A. Sprung, lead banker, Miller Buckfire & Co., LLC

At the time of its bankruptcy filing in September 2004, Interstate Bakeries Corporation, Kansas City, Missouri, was the largest wholesale baker and distributor of fresh baked bread and sweet goods in the United States under such well-known national brands as Wonder, Butternut, and Twinkies. The company, organized around 10 profit centers, operated a number of bakeries and delivered products to 200,000 food outlets. Interstate had more than 32,000 employees, over 80% of whom were covered by one of 500 different union contracts.

From 1999 to its filing, Interstate's finances were on a continual and steep decline. Contributing to the company's poor performance were declining sales as consumers were drawn to low-carbohydrate diets, reducing the demand for white bread and other refined grain products; inflexible fixed costs due to myriad collective bargaining agreements; and higher energy and ingredient costs. In the early stages of its chapter 11 filings, Interstate restructured its profit centers, launched new products, and modified union contracts. But profitability was not rising as fast as the company's baked goods. By February 2007, new leadership and a new five-year business plan intended to help the company emerge from bankruptcy and attract either financing or buyers.

Finally, in September 2008 private-equity firm Ripplewood Holdings proposed an equity investment of $130 million, coupled with proposed debt financing, and 19,000 union employees took an equity stake in Interstate and a profit-sharing plan in exchange for labor concessions, saving the company more than $50 million annually. Negotiations concluded three days before the collapse of Lehman Brothers and the resulting global credit market freeze. Thanks to the transactional team's efforts to reach consensus among key constituents in the chapter 11 cases, the plan was confirmed in December 2008, incorporating a variety of significant loans. Completing the financial arrangements proved harder than normal given the credit freeze. Nonetheless, management, the transactional team and thousands of employees persevered. In February 2009, Interstate Bakeries eventually emerged from chapter 11, saving 22,000 jobs and, like many of its famous products, rising again as a competitive and viable business.

Mid-Size Transaction (Revenue between $50 million and $300 million USD): Lyman Lumber Company. The transaction team co-leaders were:

    --  James L. Baillie, Fredrikson & Byron, P.A.

    --  Michael Knight, Alliance Management

From Albert Lyman's first lumber yard in 1897, Lyman Lumber Company, Excelsior, Minnesota, evolved into an 11 company, 18-division, vertically integrated manufacturer and distributor of building material products to local and national home builders. By 2008, it was one of the top 20 largest professional dealer lumberyards in the country. Lyman also offered specialized services to residential builders and was also engaged in real estate development and lending to builders. For more than 110 years, Lyman never lost money until, in 2007, it posted a $7 million loss during the country's worst housing crisis in 50 years.

Oversupplies of residential inventory led to severe pricing challenges and increased builder-customer demands concerning quality, service and delivery terms. Significant capital outlays between 2003 and 2007 depleted its cash reserves. In 2008, it was forced to write down a large amount of its real estate assets, causing an immediate borrowing ability crisis. The company quickly responded to its profit loss, partially caused by these industry challenges, through liquidation, sales of company-owned real estate, operations consolidation and staff reductions. However, Lyman had a highly leveraged capital structure and found itself cash-strapped when revenues started to fall. In March 2008, when it became concerned about liquidity and its debt holders, Lyman retained the law firm of Fredrikson & Byron, P.A. and the consulting firm Alliance Management, Inc. Lyman eventually chose to pursue a comprehensive reorganization of the company and a restructuring of its balance sheet outside of bankruptcy. The company presented its refinancing and debt restructuring plan to its bank group in June 2008 and to all debt-holders in December 2008.

Without litigation or a bankruptcy filing, Lyman and its team leveraged a complex and remarkable transaction by bringing nearly 200 creditor claims to resolution; letting shareholders retain ownership; preserving nearly 700 jobs; paying creditors in full over time; achieving a bank line under $20 million with more than $12.5 million in availability; receiving approval that its debt restructuring is in compliance with state and federal securities laws; and earning time to implement its new business plan. After getting its house in order, Lyman is growing in market share and has sufficient financing in place to continue through the term of its new credit agreement.

Commenting on these winners, Mette H. Kurth, chair of TMA's 2009 Awards Committee and a partner with Arent Fox LLP in Los Angeles, California, said "This year TMA selected a handful of turnaround professionals who performed an exemplary service in guiding companies, both large and small, through this difficult environment, saving both companies and jobs in the process. The winners this year exemplify the ability of turnaround professionals to apply unique solutions and tools to overcome complex and challenging situations. They also represent the significant results that can be achieved by using well-executed, textbook turnaround management techniques to transform a troubled company of any size in a variety of industries."

The Chicago-based Turnaround Management Association has more than 9,000 members in 45 regional chapters who comprise a professional community of turnaround practitioners, attorneys, accountants, investors, lenders, venture capitalists, appraisers, liquidators, executive recruiters and consultants.

SOURCE Turnaround Management Association