Challenge

A leading international producer of nitrogen products acquires a nitrogen manufacturing company pursuant to its restated Plan of Reorganization and subsequent exit from Chapter 11 Bankruptcy. The manufacturing facilities acquired are located in the East South Central Region of the United States and include a distribution terminal capable of receiving ocean-going vessels. Other assets acquired in the acquisition include interests in U.S. and offshore nitrogen production facilities. A valuation of the tangible and intangible assets was required for allocation of purchase price according to ASC 805.

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Solution

A team of financial, machinery and equipment, and real estate valuation specialists was assigned the task of inspecting and valuing the manufacturing facilities and intangible assets. As a result of review and analysis of financial information and on-site discussions with plant management and engineers concerning the unique assets and business interests, the team was able to estimate the value of the individual tangible and intangible assets on a component basis. Once the individual asset values were estimated, further analysis was performed to adjust those values on a pro rata basis to support the bankruptcy court accepted purchase price and the underlying economic downturn in the agricultural business sector.

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