Texas Turnaround Success Stories

TURNAROUND MANAGEMENT ASSOCIATION TEXAS TURNAROUND SUCCESS STORIES

Imperial Sugar Situation Imperial Sugar had insufficient profitability to support its debt structure and the company’s required capital expenditures.

Solution Texas-based Business Regeneration developed and implemented a comprehensive turnaround plan that included the following steps: • Rationalized facilities and products • Reduced debt by selling excess / non-operating assets • Re-engineered the order to cash process • Reduced working capital investment in A/R and Inventory • Reduced SG&A • Identified Profit Improvement Projects • Deployed a methodology to simultaneously monitor Profit Improvement Projects and base business Turnaround Management Association Texas Turnaround Success Stories Page 2 • Assessed the Company’s trade allowance system and brand strategy for profitability improvements • Provided insight & advice on performance metrics and financial forecasting Results Business Regeneration’s strategy and plan resulted in the following successes for Imperial Sugar. • Debt Reduction $164 M • EBITDA Improvement $30 M • Working Capital Reduction $15 MM • $6 M A/R - Immediate • $9 M Inventory - Projected • Immediate SG&A Reduction $7 M (Annualized) • Immediate cash return to company of 13 times total professional fees charged Mirant Situation William Snyder, a CRP Managing Partner, was appointed Examiner in the multi-billion-dollar bankruptcy case of Mirant Corp., an Atlanta-based energy company with annual revenues of nearly $5 billion. Mirant had experienced a series of financial setbacks, and on the eve of its $4.5 billion debt restructuring, Mirant and many of its subsidiaries filed for Chapter 11 protection, launching the largest bankruptcy case ever filed in the Northern District of Texas and one of the largest in U.S. history. The case was extremely complex, with principal players including 83 debtors, along with two official creditor committees, one official equity committee, two ad hoc creditor committees, and thousands of creditors, holding over $11 billion in claims. Through all this, Mr. Snyder and his team -- CRP Partner Paul Ravaris and Gardere Wynne Sewell attorneys Richard M. Roberson and Michael P. Cooley -- operated with lean staffing and ultimately came in $1.3 million under budget.

Initially, Mr. Snyder was appointed to investigate potential causes of action and take steps to resolve inter-company conflicts. However, as the case progressed, the scope of his duties increased over the next several months to the point where his mandate became one of the broadest ever given to a bankruptcy examiner.

Solution Turnaround Management Association Texas Turnaround Success Stories Page 3 The CRP-Gardere team completed all court-directed investigations and opened up the lines of communication, resolved conflicts, and brought order to a chaotic and difficult situation. Among other tasks, they:  Identified and eliminated a previously undisclosed $110 million liability relating to Mirant’s “Change in Control” agreements  Spearheaded negotiations that provided the basis for the debtors’ consensual plan of reorganization  Mediated several key disputes  Negotiated an overall post-petition employee benefits program  Improved overall case efficiency and streamlined data flow

Results Mirant emerged from Chapter 11 in January 2006 and was re-listed to the New York Stock Exchange under the symbol MIR. The efforts of the CRP- Gardere team were instrumental to Mirant’s successful reorganization, the near-100% recovery paid to unsecured creditors and the significant dividend paid to former shareholders.

In light of the tremendous achievements performed $1.3 million under- budget by the CRP-Gardere team, the Examiner and his team made a request to the bankruptcy court for fee enhancement. The Court awarded bonuses for the CRP-Gardere team totaling over $500,000.

In his Memorandum Opinion on Fees, the bankruptcy judge presiding over the Mirant case said, “the Examiner and his counsel have provided outstanding services in these cases … the professionals have done outstanding work and have well-earned their fees.”

Furr’s Cafeterias Situation Furr’s was a $180 million public chain of family-style buffet restaurants in the Southwest. The company also owned a commissary in South Texas. There had been no new construction in 22 years, and the facilities were in poor shape as maintenance had been deferred.

In 2002, Furr’s was suffering from four years of sales declines as were other buffet restaurants. A new chain-wide “casual dining” concept failed and traffic had plummeted. When CRP started a four-week assessment in August 2002, 40% of the chain was cash-flow negative at the store level (without corporate overhead). EBITDA was negative $2.5 million for the previous 3 months. The company had $43 million in senior debt and massive current liabilities, with $8 million owed to trade and a retirement plan that was under funded by $12 million. Turnaround Management Association Texas Turnaround Success Stories Page 4 CRP was hired as interim CEO and CFO to implement a financial and operational restructuring.

Solution Under CRP’s direction, the restaurant returned to their traditional buffet format and a new discount dinner program was introduced, which restored traffic to 2001 levels within 90 days. Weekly performance metrics were implemented to track traffic, revenues, etc. In January 2003, Furr’s filed Chapter 11 to protect against imminent liens related to the retirement plan and to enable rejection of unprofitable leases.

Results . $13 million worth of cost-cutting initiatives were identified and delivered.

. 27 under-performing locations were closed, and seven more restaurants were licensed back to former managers, which helped to keep the commissary busy.

. Within 3 months, Furr’s had established a $13 million EBITDA annual run rate without DIP financing.

. A stalking horse bidder for $30 million was identified. The bank group kept excess real estate, which more than doubled recovery from initial projections of $12 million to more than $25 million.

. Creditors received $1.5 million (10%). In the end, 3000 jobs were saved as a result of the restructuring. The company successfully emerged from bankruptcy in September 2003.

For more information, contact: Fran Gallagher Praestar Public Relations 214-762-6193, [email protected]