Safeguard Business Systems

Safeguard manufactures and distributes office supplies, primarily to small and middle-market accounts. The company had been acquired in a leveraged transaction in the late 1980's, and had been involved in a series of financial restructurings due primarily to declines in sales of core products and other operating problems. Despite the prior restructurings, the company's indebtedness remained at unacceptably high levels.

Gordian Group was engaged in 1999 to advise Safeguard and its corporate parent with respect to various alternatives. Over the course of many months, Gordian Group examined a number of capital markets alternatives, and engaged in a series of discussions with Safeguard's major creditors. These discussions led to additional financing, as well as to a moratorium on certain creditor payments. This increased financial flexibility allowed management the wherewithal to improve operations significantly.

As a result of continuing discussions with the creditor constituencies, Safeguard was able to achieve a consensual resolution with its major creditors whereby most of the company's debt was converted into equity. In connection with this restructuring, Safeguard's old equity constituency achieved an attractive recovery.