From the November 2007 issue of Treasury & Risk magazine

Silver AHA Award in Corporate Finance

Over the past decade, Boston-based Iron Mountain Inc.--with $2.5 billion in annual revenues--has grown dramatically from being a data protection and records management enterprise serving U.S. businesses, to a global concern with operations in 35 countries. That transformation presented a new set of challenges. Overseas investment of $1.4 billion had created significant foreign exchange exposures, while a legacy holding company structure in Europe introduced significant earnings volatility. The company's effective tax rate hovered at an intolerable 43%, given the impending consumption of the company's NOL's. Lastly, treasury operations and support for Europe was ineffective.

A treasury team headed by Jeff Lawrence, treasurer, together with Iron Mountain's tax and accounting departments, set out to align its financing strategy with the company's steadily evolving global footprint, while reducing its tax rate. The goals were to curb earnings volatility, improve liquidity and provide treasury services more directly. The centerpiece of the program was creation of an in-house bank based in Switzerland. This operation will eventually provide other support functions to global operations.

Meanwhile, a broad refinancing strategy involving five capital market transactions was created to naturally hedge the overseas investment portfolio by rebalancing the currency mix--specifically to increase British pound, euro and Canadian dollar denominated debt, while reducing U.S. dollar exposure. Lastly, the European legal entity structure was reorganized into new U.K. and Luxembourg holding companies to mitigate earnings volatility.

In all, the project realized annual savings of $25 million, with a one-time investment of $15 million, including financing fees. Liquidity increased from $200 million to $500 million. The big surprise to Lawrence was how much the implementation plan evolved midstream. "It was a lot like watching a fast-paced tennis match," he laughs, "contingency planning was key."

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