Bids for Standard Register were due June 11 and an auction of the former Fortune 500 company’s assets took place Monday /
Silver Point had the opportunity to increase its bid at the auction of the company, said Joe Geraghty, senior managing director for the Dayton office of Conway MacKenzie, which specializes in turnarounds and restructuring.
“I think this is all good news for the continuing entity to move forward, and that there will be a new owner for these assets,” Geraghty said.
The name of the successful bidder won’t be announced until Wednesday, when the court will confirm the new owner. Company officials declined comment until after the announcement.
Standard Register, founded in 1912, is a printing and marketing company that employs 3,500 workers, including 850 in Dayton.
The company filed for Chapter 11 bankruptcy protection March 12, simultaneously announcing the $275 million buyout agreement with a group led by Silver Point. The bankruptcy filing listed Standard Register’s total assets at $453 million and total debts at $584 million.
“Strategic buyer” indicates the unnamed bidder could be a competitor or a company in the same industry. In contrast, Silver Point is a “financial buyer” that specializes in investing in distressed companies.
If the strategic buyer acquires Standard Register, that company may look at consolidating and/or eliminating administrative expense, Geraghty said. That buyer also could consolidate Standard Register’s operations, “if there is capacity from the strategic to absorb some of those operations,” he said.
Monday’s court filing by Standard Register responded to objections by a committee of unsecured creditors to the sale process for its assets.
Court documents said 19 potential buyers demonstrated enough interest in Standard Register to execute non-disclosure agreements. The company engaged in protracted, in-depth due diligence with five parties.
“At the conclusion of this process, a strategic buyer placed a qualified topping bid that exceeded the purchase price” under the Silver Point asset purchase agreement, documents said.
Geraghty expected Silver Point to continue its bidding at Monday’s auction.
“Silver Point has invested a significant amount of money in making this acquisition and also providing the financing, so I wouldn’t be surprised if they don’t make an effort to buy it through this process, notwithstanding an overbid,” he said.
In Monday’s filing, Standard Register said the 95-day timeline between its March bankruptcy filing and this week’s auction provided “more than enough for a fair and robust sales process.”
The company said a longer sale process was unlikely to produce any additional bidders or raise the prospects for receiving a higher price for its assets. Instead, it could have resulted in a lower purchase price.
“The enterprise value of the business is like a melting ice cube: the longer the company is in bankruptcy, the greater the risk to the company’s survival,” documents said.
Geraghty said Standard Register’s key customers are relying on the company for services, and uncertainty about its future could lead them to find new suppliers.
Regardless of whether Silver Point or another bidder purchases the company, Standard Register needs to complete the transaction. “A new owner needs to come in to stabilize the business,” Geraghty said.
About the Author