The Mirus Special Situations Group
Shield Pack Inc. and Protective Packaging Ltd.
SHPK Holdings Corp. was established by a private equity firm that acquired both Shield Pack, Inc. ("Shield Pack" or "SPI"), based in West Monroe, Louisiana, and Protective Packaging Limited ("PPL"), located in Cheshire, England. SHPK was a manufacturer of high-performance specialized liners and bags used by customers to ship and store high-value goods in three areas: (i) non-liquid (i.e. "dry") chemicals, resins and foodstuffs, (ii) liquids ranging from food products to industrial chemicals, and (iii) machinery and other items that require protection from corrosion during storage and shipment.
As a result of SHPK's acquisition financing, the company was already overleveraged when the revenue of the business began to fall based on both market demand and price competition. The company's revenue dropped by just more than 10%, resulting in a decrease in EBITDA of more than 20%, which then triggered an interest coverage covenant. The covenant default forced the company to consider a recapitalization or sale of assets.
Mirus worked with SHPK's other financial advisors to bring several prospective buyers, as well as recapitalization options to the table. Ultimately, the best solution was to sell the U.K. operations to management, and recapitalize the U.S. business with new debt and equity.