After being placed on the bankruptcy auction block July 14, 2008, when its parent company, Western Nonwovens, filed for Chapter 11 with the U.S. Bankruptcy Court for the District of Delaware, Climashield has been acquired as an asset acquisition by Harvest Consumer Insulation for $1.05 million. The court announced approval of the sale on Aug. 21, and the deal closed Aug. 22.
“This is a great moment for us,” Matt Schrantz, COO of Climashield, told SNEWS®. “It means we can start pursuing the strategy we had laid out several years ago to fully establish the Climashield brand in the outdoor recreation market in the U.S. and explore logical expansion into other applications domestically.
“In addition, we can now look seriously at expansion into the Asian market by manufacturing in Asia for sale of Climashield products into Asia,” Schrantz added.
All of this has to be very good news for manufacturers such as The North Face, Kelty, Slumberjack, Sierra Designs, REI, Eastern Mountain Sports, Wenger, Patagonia and Wiggy’s which use Climashield insulations in various products.
It has been a very rough road for Climashield for the last year, as Western Nonwovens began a deep downward financial spiral that began in 2006, according to insiders. In March 2007, Western Nonwovens sold its Cerex Advanced Fabrics business to an investor group led by Jon Vesely, a Chicago-based private equity investor who had been part of the private equity group that had once owned Western Nonwovens. In June 2007, Western Nonwovens was sold to Cerberus Capital and GE Capital, which then shut down one of the company’s factories in Oakland, Calif., in December 2007. In February 2008, Western Nonwovens sold its Commerce, Calif., factory to Southern Fiber, and closed factories in Los Angeles; Clearfield, Utah; and St. Louis, Mo.
After a month of attempting to sell some of its assets, including Climashield, Western Nonwovens agreed in July to sell a significant portion of its business to SBC Manufacturing, a subsidiary of Simmons Bedding Company, and then enter Chapter 11 to facilitate the sale of Climashield and other Western Nonwoven assets.
Harvest Consumer Insulation was formed by Ken Hardin, the former CEO of Western Nonwovens, and Vesley with the initial purpose of acquiring Climashield. Hardin, now CEO and president of Harvest, also serves on the board of Cerex.
“Our initial focus with Climashield is to re-establish the fully normal operation of business,” Hardin told SNEWS®. “Climashield is a very healthy brand that was affected by the problems of the parent company. We need to quickly get capacity back to where it used to be. Next, we will focus on introducing new lighter and more compressible products Climashield had been working on before the difficulties, and finally, we will look to move into the Asian market.”
According to Schrantz, Hardin scored huge employee morale points when, immediately following the court-announced asset acquisition of Climashield, Harvest restored employees who had been laid off from jobs cut during the bankruptcy process.
Said Hardin, “In all, we saved 25 or more jobs in the Clinton, Tennessee, area; something we are, of course, very pleased about.”
Hardin indicated to SNEWS that once he and Vesley feel things are on track and healthy at Climashield, the parent company, Harvest Consumer Insulation, might begin looking toward other compatible acquisitions.
Although this was an asset-only acquisition, Schrantz told SNEWS that he very much looks forward to “working with all of our partners and friends in the industry to ensure our relationships remain strong and get even stronger. We see ourselves as not just a supplier to the outdoor industry, but a part of it.”
SNEWS® View: This has been a very difficult year for Schrantz, that we know. The normally very gregarious director of the Climashield business was understandably very subdued and quiet at the recent Outdoor Retailer Summer Market. Hard to be upbeat when you have no idea and no control over what will happen to the business you are leading.
All that is behind Schrantz now, though, and we expect all cylinders to be firing for Climashield. This acquisition by a former CEO and a private equity investor familiar with the brand reminds us of another recent transaction in a similar vein that by all appearances is going swimmingly: Gregory’s acquisition by KSS Outdoor Holdings in March 2008 (click here to read that story).
As a bit of background for the history buffs, the thread for Climashield goes back to Reliance Products which was purchased by a private equity group that owned Western Nonwovens about 10 years ago. Back then, Reliance made Polarguard. When Koch Industries purchased Invista from DuPont in 2004, Western Nonwovens was on its own, and as a result, launched Climashield. And the rest, as they say, is history.