‘Knowledge Isn’t Powerful Until You Share It’: For Knoy, Communication Is Key
By the end of 2019, Mark Knoy, president and CEO of American Commercial Barge Line, knew he had some tough and challenging tasks ahead of him. The unprecedented season of record high water along most of the inland river system had hammered his company and left it with substantial debts. “We were caught in a perfect storm,” said Knoy.
Although it does carry some liquids, ACBL is mostly a bulk carrier, carrying dry cargoes. That meant its routes were heavily concentrated in just those parts of the river system that suffered the most from the record rains, floods, and lock closures—unlike Kirby Transportation, a liquids carrier whose inland business is concentrated along the Gulf Intracoastal Waterway and other parts of the inland system that suffered less from the record flooding. Even before taking last year’s weather into account, parts of the system were suffering delays—such as the Illinois Waterway, whose locks and dams were closed part of the year to prepare for even longer scheduled closures this year.
The debt was going to have to be addressed. Since 2010, ACL (parent company of ACBL) has been owned by Platinum Equity, a private equity investment firm. In midyear, the ACL and Platinum teams, along with their advisors, began conducting negotiations with the company’s creditors, mostly investment firms whose names might not mean much to those outside the equity investment community.
At the same time, Knoy reached out of the firm’s employees, partners and customers. “Transparency has always been a core value for me. I think that’s always been part of our success. This wasn’t something we were going to hide behind,” Knoy told The Waterways Journal.
ACL reached an agreement with the firm’s creditors, who agreed to exchange $1 billion of their debt for equity stakes in the company (subject to court approval)—a sign of confidence in the company and its leadership. The company’s new owners committed to debtor-in-possession financing consisting of a $640 million asset-based loan and a $50 million term loan.
All suppliers would be paid, no employees would be laid off, and all members of the leadership team would stay in place. Business would continue as usual. “The new financing and cash from our ongoing operations will be used to pay off the existing asset-based loan, support our business and enable us to meet our obligations during the court-supervised process,” according to the company.
When the company filed voluntarily for Chapter 11 bankruptcy protection on February 7 in Houston, it would come to the judge with this “prepackaged” deal—one that 98.6 percent of the creditors had already agreed to. That normally increases the chances of approval.
Communicating that message was going to take time and effort, Knoy said. “Knowledge isn’t powerful until you share it. It really is a recapitalization of the company. It’s left us with our best balance sheet in years. We had to prepare people. The strategy behind the roll-out of our narrative was going to be an important part of our success. My message was that this was something that affected our creditors, not our customers, suppliers, vendors or employees.”
Before any public announcements were made, that strategy involved gradually bringing in an ever-widening circle of people into the know—beginning with the top 42 people in ACBL’s senior management. “We had to train managers in how to break the news, what words to use and how to put things, “said Knoy.
Once that happened, the company sent out “blitz teams” to each boat, as well as to 14 shoreside facilities, to explain the coming changes transparently and to head off inaccurate rumors. “Our goal was to get out ahead of the narrative and control it,” said Knoy. “We didn’t want to be viewed as defensive.”
The company also communicated with customers and suppliers. “A lot of our teammates, suppliers and customers were extremely pleased that we contacted them first,” said Knoy.
The outward-facing part of the strategy, launched February 4, included using social media, working with a public relations firm, setting up a website to explain the changes (https://aclrecapitalization.com/), and contacting media sources.
“At the end of the day, we’re an asset-based industry with a well-trained, experienced workforce,” said Knoy. “We’re attractive to investors at any time.”