Turnaround, Domestic Case Study

“A day in the life of a company in crisis is like a month in a healthy company.” Harvey Kibel, Kibel  Green, Inc.

Bridgewater Resources Corp. United States

Norama, AG, a Luxembourg based holding company, formed Bridgewater to acquire commercial farms and real estate property in the U.S.   The acquisition of Connor Forest Industries, Inc. transformed the group from passive investments into a major manufacturer with logging operations, lumber and flooring mills, furniture and kitchen cabinet manufacturing facilities and a toy business.  Management was not up to the challenge and large operating losses soon developed.

Bridgewater had twenty manufacturing, forestry, real estate and farm subsidiaries. The forest products group, Connor Forest Industries had four mills (union and non-union) and 159,000 acres of timberlands.  Thornburg joined Bridgewater as a Director to develop a comprehensive strategic plan for restructuring Bridgewater focusing on core manufacturing businesses; became CEO. Over the next five years the emphasis moved from restructuring to improving industrial operations, information systems, product development and marketing.  The sports flooring division captured 40% of the U.S. market and productivity was improved by 50 to 200% in key subsidiaries. The remaining non-industrial assets, including the toy company, were divested.  A large chain manufacturer with an excellent niche market was acquired and its business expanded by 50%.  By the end of year five the goals were achieved.

In addition to directing operating improvements at each subsidiary, there were significant changes made at the holding company.  For example, the corporate staff initially numbered 100 employees, four years later it was four. The bank lines were re-negotiated and all bank debt was repaid over the next four years.  The corporate structures were modified to minimize state sales taxes and effectively use federal and state tax loss carry-forwards.  Employee health, pension and corporate insurance programs were consolidated and the costs reduced or contained through the adoption of innovative flexible benefits programs.

State-of-the-art management information systems including EDI and supporting distribution facilities were developed for each BRC subsidiary. Customers included Sears, K-Mart, Toys "R" Us and Wal-Mart (where BRC maintained its sole supplier relationship for chain products).

Restructuring Bridgewater Resources Corporation
BRC Before Restructuring:
BRC After Restructuring:
1316 CARROLL AVENUE, LOS ANGELES, CA 90026
TELEPHONE  213.250.2941   ■     MOBILE   213.610.0800
http://www.thornburgandco.com        athornburg@thornburgandco.com