Cygnus Business Media, Inc.

Background

Cygnus was a privately held B2B publisher operating in 35 states, publishing nearly 80 B2B publications and websites, 17 custom publications and sponsoring approximately 32 expositions.

In 2007, with a decline in advertising expenditures and a secular shift from print to interactive media, the company's revenues and EBITDA had declined by 44% and 73%, respectively, since its 2000 acquisition by a private equity firm, putting Cygnus in a severely over-levered position.

When a sale process failed, the company evaluated both in and out-of-court restructuring alternatives and continued negotiations with its many senior and mezzanine lenders. With the sudden resignation of its co-CEOs, and only a part-time CFO in place, the company's board of directors faced a leadership vacuum at a critical time.

Project

Zolfo Cooper was initially engaged to assist the CFO to develop cash flow projections and work with the company's legal counsel and investment banker to prepare for a potential Chapter 11 filing.

Upon resignation of the co-CEO’s in January 2009, a Zolfo Cooper senior professional was named interim CEO to lead Cygnus, work with senior lenders and their financial advisors to facilitate the restructuring and fill the operating void.

Outcome

  • Over the course of nine months, Zolfo Cooper broke down operating silos and improved communication, led the company through a pre-arranged Chapter 11 process, prepared cash flow and financial projections, implemented cost containment initiatives, rationalized the portfolio of properties, began integrating brand groups to create a more efficient sales structure and improved processes to deploy and prioritize technological initiatives.

  • Cygnus was able to emerge from Chapter 11 within 45 days. Due to the planning and efficiency of the process, coupled with effective communications, the filing had no negative impact on the company’s operations, employee morale or customer relationships. Operations were streamlined prior to the filing to stabilize and prepare the company for rapidly declining revenues.

  • The filing facilitated a substantial reduction of debt (71%), enhanced liquidity through a new revolving credit line and a significant lease renegotiation.

  • Zolfo Cooper successfully supported the operational and financial activities of Cygnus and transitioned roles and responsibilities to the new management team after emergence.