When Michael Lundin took the helm of Oglebay Norton in 2003, the company clearly needed a new direction.
The company’s stock, which traded for more than $45 a share in 1998, had fallen to 71 cents by early 2004, and the debt burden Lundin inherited dragged the company into Chapter 11 bankruptcy.
But even with the challenge of a restructuring hanging over him, he knew Oglebay Norton still had potential.
“It was a balance sheet issue, it was not a business issue,” he says.
A key part of his plan was having a clear vision as to what the company is and what its goals are and communicating that to employees and customers alike. This plan was being formulated even before the bankruptcy filing.
“There was a transformation going on within the company and the analysis was ongoing during the restructuring,” Lundin says. “If you look back at the 2002 report, we really laid out four platforms the company is founded on. We are a minerals company: We process, we purify, we package and we provide high-quality chemical stone and sand for our customers.
“At the same time, we reward our employees and create long-term value for our investors. We have not lost sight of that. That vision was put together in 2002, and it is still the vision that guides the company.”
Although the bankruptcy filing was unavoidable, Lundin credits the clear plan with keeping the company and its employees focused during the 11-month bankruptcy process.
A new management team was brought in to help Lundin take the company in a new direction. All but one member of the board of directors resigned. It was like starting over.
“With the vision in place and these four objectives, those were our guiding principles as we moved through bankruptcy,” he says. “Now having gone through the process, I think those foundations served us well. We were able to allocate work and use that as our guiding focus. People weren’t playing out of position, wondering who we are or where we were going.”
Lundin also worked with his team to break the company down and really understand where the profits were.
“What we did was (we) took the company apart and looked at the core fundamentals,” he says.
“I believe that having accurate, timely, strategic data made available to the company to make proper and effective decisions is critical. We came in and took that area of our business and looked at it. We said, ‘What data does the company need?’”
When that was determined, systems were put in place to provide that data. Customers were scrutinized to figure out profitability potential.
Examining the data not only showed Lundin where the opportunities were, but also how each area of the company interrelated to the other and how all of it tied back into profitability.
“We began to understand the relationship of volume to revenue to profitability,” he says.
The company started looking at its risks in various markets and how they could be better managed. And it placed emphasis on spreading the risks into less volatile markets.
The company survived Chapter 11 and managed to keep delivering products and paying its vendors. Oglebay Norton has moved beyond survival and is now looking at sustainability and eventually profitability if all goes as planned.
“One key objective was to keep the business intact and come out of bankruptcy with a sustainable capital structure,” Lundin says. “We kept it intact, we didn’t lose customers, and I believe the capital structure we have today is sustainable. With what I know today, when I look at the capital structure, the team we have in place, the commitment and support we have from the board and the opportunities we have, I believe we have all the key components necessary for us to execute our vision as we’ve laid it out.
“We’ve really stepped back and understood what constitutes the company and took the time to fully understand that and do the heavy lifting, put a plan in place, the right team in place and the infrastructure in place. Now we have a capital structure that is sustainable, and we look to further refine it. We have a clearly defined and executable vision. That’s what’s important to me. It’s something that’s achievable. Now we just need to do it.”
HOW TO REACH: Oglebay Norton, (216) 861-3300 or www.oglebaynorton.com