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Case Study: Phoenix Forge Introduction Phoenix Forge, a small forge located in Youngstown, Ohio, has operated for many years as a subsidiary of a large conglomerate. Phoenix Forge uses five ers to make forged metal parts for cars, trucks, aircraft, off-highway ent, the petrochemical industry, and the military. It is 1984 and the t company, faced with declining sales and losses at Phoenix Forge, has o sell the company to its employees in lieu of closing the plant. The ees want to purchase Phoenix Forge and operate it as an employee- ned corporation. They recruited an ex-plant manager of Phoenix Forge, successfully completed the turnaround of another small forge company Adlantic Forge), as the new company president. The employces now need to raise $1.2 million to purchase the company and fund working capital and equipment 0. fixed asset investment needs during their first 3 years of operations. Phoenix Forge employees have prepared a business plan and approached a local bank, the City of Youngstown, and the Community Loan Fund to secure the needed capital. The employees requested a $200,000 subordinate loan from the Community Loan Fund (CLF), a regional nonprofit economic development loan fund whose mission is to retain existing manufacturing jobs and stimulate new job creation by providing gap financing to small businesses. As the loan officer for CLF, your task is to review the business plan summary and financial projections presented in this document and pre- pare a recommendation to the CLF board of directors on the loan request. nomic Conditions in the Youngstown Region Yo Ec gstown is located in northeast Ohio within the Youngstown-Warren tan area. The region's economy is heavily dependent on manufac- especially steel and metalworking. Foreign competition and economic Case Study: Phoenix Forge Introduction Phoenix Forge, a small forge located in Youngstown, Ohio, has operated for many years as a subsidiary of a large conglomerate. Phoenix Forge uses five ers to make forged metal parts for cars, trucks, aircraft, off-highway ent, the petrochemical industry, and the military. It is 1984 and the t company, faced with declining sales and losses at Phoenix Forge, has o sell the company to its employees in lieu of closing the plant. The ees want to purchase Phoenix Forge and operate it as an employee- ned corporation. They recruited an ex-plant manager of Phoenix Forge, successfully completed the turnaround of another small forge company Adlantic Forge), as the new company president. The employces now need to raise $1.2 million to purchase the company and fund working capital and equipment 0. fixed asset investment needs during their first 3 years of operations. Phoenix Forge employees have prepared a business plan and approached a local bank, the City of Youngstown, and the Community Loan Fund to secure the needed capital. The employees requested a $200,000 subordinate loan from the Community Loan Fund (CLF), a regional nonprofit economic development loan fund whose mission is to retain existing manufacturing jobs and stimulate new job creation by providing gap financing to small businesses. As the loan officer for CLF, your task is to review the business plan summary and financial projections presented in this document and pre- pare a recommendation to the CLF board of directors on the loan request. nomic Conditions in the Youngstown Region Yo Ec gstown is located in northeast Ohio within the Youngstown-Warren tan area. The region's economy is heavily dependent on manufac- especially steel and metalworking. Foreign competition and economic

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