National Distributor of Packaging Equipment and Supplies-20 Locations
Recent Revenue of Approximately $115 Million Annually
Headquarters near Houston and Chicago
Our firm has been retained to sell the business or assets (primarily inventory and accounts receivable) of Gulf Packaging, Inc. (“GPI” or “the Company”) which has been providing quality packaging equipment and supplies to a national market since the mid ‘70s. The Company has a history of exceeding customer expectations by offering an extensive range of packaging products, top quality service, competitive prices, and a knowledgeable staff. GPI sells its products through several independent entities (“Affiliates”), which it intended to roll up into GPI, and some of which may be available for acquisition along with GPI. When GPI is combined with its Affiliates, there are twenty 20 warehousing locations, both public and private. In combination with the Affiliates, GPI’s aggregate historical monthly sales are approximately $9.5 million.
|Inventory by Category:|
|Strapping – Steel||$562,892.13||Corrugated||$219,309.55||Equipment – New||$423,437.39|
|Steel/Poly Seals||$64,655.29||Marking/Labeling||$112,696.89||Equipment – Used||$81,962.37|
|Tools & Dispensers||$111,734.55||Protective Wraps||$167,120.20||Shipping Room Supplies||$166,349.96|
|Strapping – Plastic||$806,366.75||Stretch Film||$747,357.49||$28,804.57|
|Wire Products||$62,803.16||Poly – Bags & Sheets||$832,874.93||Parts||$1,136,679.66|
The original genesis of GPI and related Affiliates was the formation of Gulf-Great Lakes Packaging Corporation (“GGL”) in 1975 in Chicago, followed by Gulf Systems, Inc. (“GSI”) in 1977 in Houston. As sales and the customer base increased, new “Gulf-related” entities were formed to serve particular geographic locations. These new entities were separate and independent entities, with the management of the location often receiving a portion of the equity in the new entity. It was advantageous to maintain offices in various locations as a way to maintain and increase customer satisfaction and reduce shipping times and costs.
GPI was formed as a Texas corporation on February 14, 2012. The concept at the time was for the independent Affiliates to “roll-up” into GPI and operate, if not formally, in practice and in the customers’ eyes, as one large national company. The Affiliates would remain separate legal entities with their own distinct ownership, or would roll up their ownership in exchange for ownership in GPI, and GPI would centralize all of the accounting, marketing and other administrative tasks to take advantage of synergies and minimize costs. GPI’s equity is held in equal parts by two families (the founding families of GGL and GSI).
Sales dropped in 2013, while GPI experienced increased costs and capital expenditures to make acquisitions and help initiate the informal roll-up. In late 2013, one of GPI’s lenders decided to exit the asset-based finance business, necessitating a refinancing of that credit facility. Roughly simultaneous with this event, GPI’s working capital lender implemented certain risk minimization measures and informed GPI that its working capital facility would be significantly reduced. This lead GPI to seek, and ultimately obtain, replacement financing.
Upon the closing of the new credit facility, in mid-2014, the Company began the process of formalizing the roll-up and attempted to consolidate common operations to eliminate redundancies and capture operating efficiencies. Unfortunately, the Company failed to realize the economies of scale and savings from the roll-up in time to benefit during the historically busy sale season of the second and third quarters in 2014. As a result, the new credit facility was drawn to capacity. The ensuing lack of liquidity necessary for GPI to purchase inventory created an extended sales backlog. In October 2014, their lender provided notice to the Company regarding the existence of a state of default under the credit agreement. This, in combination with a number of market anomalies, including the West Coast port slowdown and labor dispute and tightening credit terms from vendors, led to the Company filing for bankruptcy protection in April 2015.
This is an excellent opportunity to acquire a well-established sales/distribution company, or its inventory assets. There is a significant opportunity to expand the customer base, increase revenue from current products within the Company’s extensive existing customer base, and also to expand into new products through their distribution network.