Goss' money matters

By: Jim Rosenberg Manufacturer may exit Chapter 11 within months


Agreement among Goss Graphic Systems' principal stockholder, noteholders, and banks led to a prearranged Chapter 11 proceeding July 30 in U.S. Bankruptcy Court in Delaware.
For more than a year, Goss has experienced problems related to finances, personnel, labor, capacity, and computer systems. The company says the financial restructuring under Chapter 11 should conclude efforts to find and fix the difficulties it has faced (E&P, March 20, April 17). No jobs were eliminated and layoffs are not anticipated, says marketing director Barbara Gora.
Holders of more than two-thirds of the company's 12% senior subordinated notes due in 2006 agreed to exchange the $225 million principal amount of notes outstanding for new notes issued at half that amount, as well as for certain new company stock.
Lenders of $200 million in revolving credit and principal stockholder Stonington Partners will together supply Goss with an extra $100 million. To provide enough working capital to ensure normal operation during the restructuring, some bank lenders and Stonington also committed up to $50 million in interim financing.
Jim Sheehan, Goss chairman since December and its ceo since Robert Kuhn's departure in March, says he expects the company to emerge from Chapter 11 within several months. During that time, he adds, the agreement allows "uninterrupted service" to customers. Goss also says all creditors' claims "will either not be impaired or will be paid in full over time."
The printing equipment manufacturer bought from Rockwell International in 1996 has approximately two-thirds of the North American market for large and small web-offset newspaper presses. It's had a long-standing presence in East Asia and Europe. It finally cracked the German market last year with the sale of a shaftless, 70,000 Uniliner press, built at its Nantes, France, plant with a short cutoff suitable for central Europe's popular Berliner-format editions.
Besides a large order from the New York Post, recent projects include major additions to press lines for two big customers. "We're waiting for the units to arrive," says Dick Ruble, printing operations director at the Star Tribune in Minneapolis, where Goss' difficulties delayed unit installations from June until late this month. Nevertheless, Goss installers and Masthead erectors tell Ruble they can make the original operating target of mid-October. All other iron is ready: connecting frames are on site, Y columns are standing, and sole plates are in.
"All the contracts that we signed are still on the books," says Gora. "We are in the process of jump-starting our plants," she continues, adding that it takes a couple of weeks to "get in sync" with customers and suppliers ? which Goss has directly contacted since it sought Chapter 11 protection.
Gora says Goss probably won't study its research and development budget until it is beyond the initial stage of reorganization. Nevertheless, Goss is moving ahead with enabling technologies ? such as single-fluid lithography ? of its Adopt digital offset printing project.
European and Asian Goss subsidiaries are not included in the proceedings, are "not affected at all" by them, and "have never been the problem," Gora says. In addition to the upgrades and expansions in the United Kingdom (E&P, July 17), Goss recently sold everything from a Community press to an Irish paper to a Universal 70 to a major Spanish printer.
Recent orders for various single-wide presses came from India, Scandinavia, and Central America.
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