Case STudy: Champlain Cable

Champlain Cable Corporation, headquartered in Colchester, VT, is a designer, manufacturer and marketer worldwide of specialized, high performance wire and cable for a wide range of applications in the automotive, commercial vehicle, marine, defense, mining, oil and gas, telecommunications sectors.  

 Champlain was a single location manufacturing operation when it was acquired in June 2003 by an AIAC affiliate, CC Acquisition Corporation, from Huber + Suhner, a multinational manufacturer of wire and cable, based in Zurich, Switzerland. For the year ended December 31, 2002, Champlain’s revenues where very low and EBITDA losses were staggering   It had 108 employees, most of whom were represented by the Teamsters union.  At that time, Champlain had thousands of related class action soil and groundwater environmental cleanup obligations, shortfalls in pension underfunding liabilities. The acquisition transaction was structured as a purchase of common stock.  The purchase price was $1,000 in cash, $2.52 million in newly issued convertible preferred stock issued to the seller, a $1.1 million convertible, subordinated note issued to the seller, and a refinancing of $5.1 million in a senior secured bank loan, for a total enterprise value of $8.7 million.  

The first year turnaround action steps included a headcount reduction of 16 persons, along with reductions in labor hours, materials, selling, general, and administrative costs.  All major contracts were resourced and renegotiated.  Within 9 months, Champlain produced a positive monthly EBITDA. For the year ended December 31, 2003, Champlain produced revenues of $21.3 million and EBITDA of $1.3 million. Over the following years, Champlain has grown organically, and through strategic acquisitions from a single site to five production facilities, in Vermont, Texas, and Michigan.  Champlain’s products now include high performance wire, cable, tube, and strip products. The company is in full compliance with its environmental, pension, and other obligations. Champlain has produced 8x the revenue and more than 11 times the EBITDA, and Shareholders’ Equity was $51.6 million, with a union and nonunion base of 376 employees.