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Following a period of one and a half years as a debtor in possession, the chief restructuring officer Mr Jochen Glück has found an investor for Duisburg Tubes Production AG. The manufacturer of cladding tubes for the nuclear industry has been sold to Taihai Manoir Nuclear Equipment Co. The stock-listed Chinese group specialises in producing and selling nuclear power plant, special equipment and petrochemical facilities.
The purchase agreement has already been signed and notarised in June 2017 and has been approved by the Federal Ministry for Economic Affairs in October. Taihai is taking over all the 90 members of staff. This means that the debtor-in-possession proceedings can be completed successfully.
Multimillion euro orders received
The business administration expert Mr Jochen Glück from the restructuring firm PLUTA has been acting as the chief restructuring officer of Duisburg Tubes Production AG (DTP) since the spring of 2016. PLUTA’s restructuring team also includes Dr Maximilian Pluta and Mr Ludwig Stern. Mr Martin Lambrecht from the law firm LAMBRECHT supported and oversaw the proceedings in his capacity as the insolvency monitor.
In April 2016, DTP had to file for insolvency with the competent local court. At that time, the company had a workforce of 156 employees and a zero-euro-order backlog in the nuclear industrial field. In view of the changed market conditions, the company intended to conquer new markets and above all new industries. However, the restructuring expert Mr Jochen Glück was able to recognise after a few months that DTP’s production processes were not suitable for this. The production quality standards in the nuclear industry are considerably higher than in other sectors. Moreover, DTP specialises in manufacturing tubes of up to 5 meters in length, while other sectors require flexible and smaller dimensions.
Chief restructuring officer Mr Glück explained: “After a period of not even three months since I assumed this position, we decided that the company had to refocus on its core business with the nuclear industry.” All other sales activities were discontinued. The workforce in production and administration had to be reduced in mid-2016 and a social plan was drawn up for the employees, by mutual agreement with the works council and the IG BCE trade union.
At the same time the company won a first multimillion euro order, which allowed them to ramp up production again. At the end of 2016, there followed additional multimillion euro orders for the years 2017 and 2018. In this context, agreements have been entered into with the main customer, Areva, concerning an annual production of 1,000 kilometres of cladding tubes. These new orders were an excellent basis for holding the final discussions with potential investors. The sales process was professionally supported by KPMG in their capacity as M&A consultants.
By comparison: In 2016, DTP produced a total of 365 kilometres of cladding tubes. In the first ten months of 2017, a production output of roughly 1,300 kilometres was achieved, although only 1,000 kilometres had initially been agreed. Assuming sales revenues of more than 10 million euros, the company will probably generate an EBIT of approximately 10% in 2017. Whereas a high loss was still recorded in the first half of 2016.
Improved quality management and increased efficiency
In parallel to cutting costs, which was indispensable, Mr Jochen Glück implemented a great number of measures to ensure that DTP can get back on the road to success. This involved improving quality management and drastically reducing error rates. As a result, the company’s production is much more efficient and cost-effective today. Some of the works council members have in the meantime been appointed to key positions and are now sharing the responsibility for the company’s success.
PLUTA expert Mr Glück explained: “We have definitively succeeded in restructuring DTP. Special mention should be made of the very good cooperation with the insolvency monitor. I also would like to thank all the members of staff who did such an excellent job over the past months.”
The Chinese investor will develop the company further in future and reduce their dependence on a single customer. Jochen Glück and his team have laid the foundations for this, which means that the Duisburg plant will continue to produce cladding tubes made in Germany in future.