Working on a turnaround
Monday, December 27, 2010
Sunrise Senior Living chief executive Mark S. Ordan was sitting across the table from his company's banker and staring at a disbelieving face.
It was the fall of 2008 and Ordan's McLean-based elderly care company owed $95 million in loans, was reeling from an accounting scandal and seemed headed for certain bankruptcy.
Now he was sitting in a New Hartford, Conn., office of Bank of America, Sunrise's chief lender, pleading for time.
"Those first meetings were horrible," recalled Ordan, who has become one of Washington's turnaround experts based on Sunrise and his previous gig at troubled shopping mall giant Mills Corp. "The bankers were incredibly frosty. If I said the sky was blue, they wouldn't believe me."
Ordan made the case to Bank of America that he was new to the company and did not represent past management. He pleaded for time. He could turn it around. Sunrise could avoid bankruptcy if it could just have time to sell some of its 439 properties around the United States and Europe.
"I said there were assets we can sell, and if we can sell them in an orderly way, we will take some of the proceeds and we will pay you the money we owe you," Ordan recalled as he chewed on a salad during a recent lunch at a Tysons Corner restaurant. "He looked me in the eye and believed."
Sunrise has survived, but its under $6-per-share price is far below the $30-plus price it enjoyed in its heyday. And the company looks much different. It's leaner, and its balance sheet is cleaner. It even made a recent deal to increase its share of a joint venture, a nice switch after two years of divesting itself of properties.
But it took a while to get there.
Ordan's three-year journey through Sunrise, founded by husband and wife Paul and Terry Klaassen, contains lessons for other executives facing similar circumstances.
Although a Washington networker, Ordan was not schooled to be a turnaround guy. A Vassar College philosophy major who graduated from Harvard Business School, he made his first millions building and selling Fresh Fields, the Washington area grocery chain that became Whole Foods. He later formed an investment team that purchased Sutton Place Gourmet and morphed it into Balducci's, selling it to another investment group.
The Mills Corp. board came calling in 2006, asking Ordan to help fix the company, which was reeling from an accounting restatement and an investigation by the Securities and Exchange Commission. He helped find a buyer.
Ordan was working on philanthropy projects when the Sunrise opportunity started percolating. He had known founder Paul Klaassen since the 1990s through their membership in the Young Presidents' Organization, a leadership group. They reconnected when Klaassen called Ordan to ask about a potential hire Klaassen was considering.