Turnaround Nets First-Time Profitability for ExpressPoint Technology Services

Situation

Two years ago, Twin Cities-based ExpressPoint Technology Services, Inc. faced leadership issues, onerous debt service, a complicated capital structure, and ongoing losses. This $55 million-dollar company, which provides depot repair services for computers and cash register repair for major retailers, had grown dramatically. The previous president had been hired to manage growth but had not succeeded. The bank and three secured sub debt lenders had issued default notices. ExpressPoint needed immediate help.

Solution

ExpressPoint hired Platinum Group as management consultants in November 2002 and, within two months, Platinum was named president and COO. The founder, Mike Cibulka, remained chairman of the board and very few employee changes were necessary. The primary turnaround approach addressed operational changes, in tandem with significant capital restructuring. In the process, three senior secured sub debt lenders, and a dozen subordinate debt holders agreed to convert debt into equity, which strengthened the balance sheet. This also paved the way for Wells Fargo to provide a new $8MM revolving line of credit, which secured the needed working capital for the company’s future and prevented the need to seek protection within bankruptcy court.

• Senior Bankers: US Bank;Wells Fargo Bank
• Attorneys: Fredrickson & Byron
• CPA Firm: Price Waterhouse Coopers
• Secured Sub Debt Bankers: Dominion Capital, Citizens Capital, Keystone Capital

Results

With Platinum’s leadership and support, the company’s restructuring has provided ongoing viability and profitability. ExpressPoint has been profitable since June 2003, the first time in the company’s history. Platinum Group was named CEO and appointed to the board of directors. Based on the results, Platinum Group received the first “Turnaround of the Year” award by the Turnaround Management Association’s Upper Midwest Chapter in September 2004.