After a near collapse, Oglebay Norton found its second lease on life in bankruptcy court. And company President and CEO Michael Lundin is confident the opportunity won't be squandered.

Oglebay Norton was founded in 1854 as a Great Lakes' shipping company. In 1998 it entered the aggregate industry by acquiring Global Stone, and later Michigan Limestone Operations. Along with the new business units, it also acquired a great deal of debt. In 2001, the company began reporting losses and saw its stock price plummet. In 2002, the stock fell from $17.68 a share to a year-end price of $6.65 per share. By early 2004, the stock fell below $1 and was delisted from the NASDAQ stock exchange on March 3, 2004. A week earlier, Oglebay Norton sought and received Chapter 11 bankruptcy protection.

As the company's problems rose, so did one its executives who came with the 2000 Michigan Limestone Operations acquisition. Within three years Lundin became president and CEO. He made cost-cutting moves and turned over his top management team. In the end, those efforts were not enough to keep the company out of bankruptcy court. However, Lundin says those moves left the company in a good position as it comes out of bankruptcy.

Oglebay Norton entered Chapter 11 with about $440 million in debt. The restructured company expects to emerge from Chapter 11 on Jan. 31. When it does, that debt will be $260 million. However, its creditors will be paid 100 cents on the dollar, Lundin says. The financing, nearly $400 million, is in place. “We are really going to be in a position to devote our full attention to running the business and executing our strategic plan,” he says.

One reason for Lundin's confidence is that much of the heavy lifting was done before Oglebay Norton filed for Chapter 11. Between 2001 and 2003, Oglebay Norton closed its sand headquarters in Phoenix, its Global Stone headquarters, and three under-performing abrasives operations. Retooling the senior management team reduce salaries by 15%. The company also sold its lawn and garden business as well as the ready-mix concrete and trucking components of Erie Sand and Gravel.

“We did a lot of that work in advance of filing for Chapter 11,” Lundin says. Through the Chapter 11 process, Oglebay Norton kept all of its operations running and did not miss any customer deliveries or lose any customers, he says. Prior to filing, the company did cut some employee insurance and halted its 401(k) matching program. Those moves helped save the company about $9 million per year, he says.

Such cuts don't seem to have deteriorated employee relations. “About 47% of our plants are unionized,” Lundin says. During the restructuring process, four contracts came up for renegotiation. “We successfully negotiated all four of those.”

The company will continue trying to unload its mica division, which is a small percentage of the overall business. Beyond that, he says there are no plans to sell off any other pieces. For that matter, there are no plans to add more operations. “Decisions on any other assets, be it disposal or acquisition, will come after some time has passed,” he says.

But snowballing debt and net losses isn't the whole story. A slowing economy, increasing health care and higher energy costs, and increased administrative expenses from renegotiated bank agreements added to the company's troubles, he says.

“It was a number of things coming together that caused us to … file,” Lundin says. “It all started with the amount of indebtedness and the capital structure, and the company's inability to sustain that.”

So what's next for a company that produces 2 million tpy of sand and 25 million tpy of limestone — half of which is construction material?

“The strategy we made public two years ago hasn't changed,” Lundin says. “(It's) to expand our current markets and develop new ones for our core limestone and limestone filler businesses.” The new management team, especially Michael Minkel, vice president of sales and business development, made several recommendations that can now be acted upon. One thing Oglebay Norton has done to meet this end is expand production capacity at certain plants.

Lundin says the strategic plan no in place should keep the company from repeating its poor performance. “My management team and I came in after these acquisitions,” he says. “Over that time, (we've) taken a long, hard look at our business … with the counsel of a lot of advisors.” They evaluated their options and presented their case to potential lenders and the bankruptcy court. Both bought into the plan. “We have vetted this out and have a plan we think is sustainable. We need to remain focused on executing that plan.”

Yet, the 3,000-pound gorilla in the room remains debt. “Clearly, our focus is going to be to execute our strategy and to generate cash flow to pay down debt. I would like to see it reduced over time and that is going to be one of my key areas of focus.”

And while Lundin is confident the company's plan will work, he's cautious about predictions regarding profitability. “We're not providing any guidance on those types of things,” he says. After emerging from bankruptcy, Lundin says a new board of directors will be put in place. Once the board is in place, they and Lundin will determine what type of guidance to give.