Business Description

Gustin Kramer Limited was a contract manufacturer and private label supplier of paper and non-woven consumer products to major retailers and branded consumer product companies. Prior to joining TorQuest, one of our partners was CEO and controlling shareholder of Gustin Kramer from 1994 until early 2002.

Investment Thesis

The goal was to turnaround this troubled, highly leveraged company by divesting the under performing divisions and expanding the business into consumable, non-food consumer products which generated higher margins and stable cash flows. By improving production processes to meet the increasingly difficult demands of its customer base and by developing new products, Gustin Kramer could become a diversified consumer product company serving the global market. As a privately held company, the goal was to maximize value while not diluting the shareholder's equity ownership.

Strategic Initiatives

Under-performing divisions and product lines were immediately sold, creating improved cash flow. The company was re-capitalized, resulting in appropriate covenants that allowed for investment in process improvement, product development and important additions to management. A management team was developed. Operating margins were improved significantly and the business doubled revenues between 1995 and 2002.

Investment Results

In 2002, a strategic buyer purchased the paper division (the company's largest division) for a substantial multiple of earnings. Proceeds flowed directly to the shareholders. By preserving equity ownership, the CEO, with a relatively small investment, earned outstanding returns.

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