Case Study: Asset Disposition Results in Significant Costs Savings With Minimum Distraction to Management
Background
A $500 million national consumer packaged goods company undergoing extensive restructuring retained Well Advised to assist with the disposition of several large, legacy distribution facilities on East Coast. The company’s distribution facilities had significant structural damage caused by years, and in some cases decades, of neglect, and were storing massive amounts of outdated equipment which required removal and sale or scrapping. All facilities had issues requiring immediate attention/remediation before their leases ended, giving the project team just under four months to complete the project. The company also desired to consolidate its operations to one regional distribution facility, requiring a lengthy feasibility study involving state and local governments.
Process
Well Advised worked with the company’s restructuring team and interim senior management culminating in a solution that split the existing issues into two projects. First, we assisted with identifying and disposing of assets in the existing facilities that could be salvaged, simultaneously negotiating with the properties’ landlords to restructure the existing leases. We also provided company management several with in-depth lease analyses to assist with the relocation/consolidation decision-making process.
Result
Although the company faced over $3million in potential liability owing to the condition of the legacy Well Advised able to significantly reduce the company’s lease liability, and ultimately achieved the goal of a complete disposition of all legacy real estate and related issues, together with a new long-term lease for the company’s main regional distribution facility, all completed prior to the lease expiration deadlines.
The Company’s former COO had this to say about our efforts in the real estate workout area:
“David consistently provided sage counsel to me, as interim COO and to the management team regarding the real estate matters, and ultimately completed a complex project under budget, which helped our bottom line. But more than this, we became comfortable that we could focus on the intense strategic planning needed for successful implementation of our turnaround plan, without being distracted by legacy issues, important as they were. We knew that David and Well Advised were in lockstep with us, and this is borne out by the significant costs savings realized by the lease restructuring efforts and asset disposition work they performed.”