Wednesday, March 9, 2011

Florida Reprographics (Tampa, FL) Chapter 11 Bankruptcy (Part 6)

We’ve done five previous posts on “Reprographics 101” about Florida Reprographics’ Chapter 11 Bankruptcy. If you want to review those earlier posts, enter “Florida Reprographics” in the search window above.

In my mind, the “BIG QUESTION”, at this point, is “will another reprographer sweep in and take over Florida Reprographics’ business by offering a deal to the Bankruptcy Court (and to FR’s creditors) that represents a sweeter deal for FR’s secured and unsecured creditors?

If, in the past, you’ve read lots of articles about businesses that get into financial trouble, it’s likely that you are already aware that, when a company gets into financial trouble, it is not uncommon for “outsiders” to swoop in and attempt to takeover the troubled company. They sometimes do that by negotiating with secured creditors, sometimes even buying the largest secured creditor’s debt-position, which then makes the “hostile takeover party” a “party at interest” in the BK matter.

When I was in business in the Tampa market (prior to selling our company, NGI, to American Reprographics Co (ARC) (Dec 2007), FR was one of NGI’s competitors. FR had a good reputation for service. However, as a businessperson, I found FR’s prices to be ultra low. When you combine a huge fall-off in demand with low-price, that often proves to be a killer after a recession takes hold. And, in the reprographics industry, recessions do happen.

In 2009, FR won a bid for reprographics services for Pinellas County Schools (PCSB).

The “award” PCSB made to FR was a “two-year” award, ending in June 2011. Although it was a two-year award, PCSB has long had a habit of “extending” awards beyond the stated expiration date of the initial contract-period term. The stated “contract value” of that award was $500,000.

Since this was a “competitive-bid” procurement, where “lowest price” prevailed, FR won the award because its “total bid price” was the lowest of all of the reprographers who submitted bids to PCSB.

FR’s bid-price for “large-format black & white” plans on plain white bond paper - $.04 per sq ft. FR’s bid-price for 8 ½ x 11 specs - $.035 per impression.

FR is obligated to provide free pick up and delivery. FR’s new location is on the east-side of Tampa. PCSB’s offices are (and the entire county of Pinellas is) located “west” of Tampa, across Tampa Bay. At gas prices approaching $4.00 per gallon, I would not be a happy camper if I had to do lots of small orders at $.04 per sq ft.

If you want to look at the “bid award” document (which shows all of the prices that FR bid), you can access that document at this (click-on) link:

Going back to the “big question” is it likely that another reprographer will make an attempt to take over FR’s business? If so, might the party be ARC, ABC Imaging, Thomas Repro, Service Point? Or, maybe one of the Tampa reprographers?

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