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Norwood Promotional Products Looks To Future After Bankruptcy Filing
The news of Norwood Promotional Products’ decision to file for Chapter 11 bankruptcy today is burning through the industry like California wildfires, but CEO Paul Lage, MAS, appears to be taking it in stride. Lage spoke with PPB Newslink about the decision to file and his outlook on the future of Norwood. Rest assured, says Lage -- for one of the industry’s largest and most successful suppliers, it’s still business as usual.
The bankruptcy means the Indianapolis, Indiana-based supplier will be able “to deleverage and clean up our balance sheets,” says Lage. “There will be no layoffs, and there will be no effect on our customers or our employees.”
Lage explains that after nearly two years of negotiations with Norwood’s lenders to gain refinancing -- and recognizing that notes were coming due in a matter of weeks -- leaders at Norwood made the decision this morning to file in court and have agreed, in principle, to sell to Aurora Resurgence. Aurora Resurgence is affiliated with Los Angeles-based Aurora Capital Group, a private equity firm. Aurora has secured financing in support of the sale from a unit of Wells Fargo & Co.
“We have always been a highly leveraged company,” he says. “We found selling to be a better solution, because we could not put together a consensual agreement [between all lenders].”
PPAI President and CEO Steve Slagle, CAE, also spoke with Lage about the transition. “As usual, Paul remains positive in his approach and expectations,” says Slagle. “In my conversation with him, he expressed his confidence that the company will emerge in 60 days a stronger company.
“Norwood has been one of the industry’s top suppliers for many years and their management’s decision appears to be a solid one to maintain that status,” he says.
Lage is determined to address any concerns customers and vendors might have as a result of the stigma attached to bankruptcy, such as fears of insolvency. Early reports of the filing incorrectly attributed the decision to last summer’s Midwest floods, which damaged Norwood’s Souvenir facilities and prompted a relocation. Lage says the floods had no effect on Norwood’s financials and the supplier has continued to sell, even in the tough economy.
“We are making money,” he says.“The imagery [of bankruptcy] is the part we fear the most; we want to communicate clearly with customers to eliminate some of their fears. We are not announcing changes other than to say it is business as usual.”
Norwood held an all-staff meeting this morning and since then, separate departments have held their own follow-up meetings. Lage says employees will see no change in their schedules, and the company will communicate clearly with customers and vendors to make sure “it is as smooth a process as possible.”
The bankruptcy proceedings are expected to last 60 days; Lage says the decision to file was voluntary and as such the company’s structure and personnel will remain intact after the purchase by Aurora is complete.
“There isn’t anything fundamentally different,” he says. “It’s going to allow us to clean up old stuff that doesn’t apply to Norwood today. At the end of the day we’re going to have less debt, and it will allow us to have more flexibility and invest more in our future. We want to continue striving to be the premier promotional products supplier.”
Lage says he looks to Norwood’s customers for support during the transition. “That will help us drive through it,” he says.
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