Automotive Parts Manufacturer

Automotive Parts Manufacturer

Roles
Chief Restructuring Officer
  • Real estate was surrendered to owner
  • Senior secured lender was paid in full
  • BOD and owners were able to exit without lawsuits or problematic claims

The company was a $25MM automotive parts manufacturer and marketer facing a liquidity crisis after its private equity sponsors did not provide additional funding. CR3 Partners was engaged as CRO to pursue restructuring options and ultimately negotiated with customers and lender about funding an orderly transition of production to other manufacturers. All customers successfully transitioned their products to other manufacturing locations, the senior secured lender was paid in full, and Board of Directors and owners were able to exit investment without lawsuits or problematic claims.

The Situation

  • $25MM automotive parts manufacturer and marketer that created exhaust hangers and primarily served the truck market
  • Company had two locations that manufactured automotive parts and one location that manufactured children’s toys
  • Company was experiencing liquidity issues for several years and private equity sponsors ultimately decided not to provide additional funding
  • Liquidity crisis created a chain reaction of events in which senior lender restricted funding, vendors withheld shipments of materials, and production for company’s customers was interrupted

 The Work

  • CR3 was engaged as CRO by Board of Directors to pursue a dual-path approach of a sale or a wind-down
  • Considered sale of company to potential strategic buyers after receiving interest from three different groups
  • After determining offers were insufficient, CR3 pivoted to negotiations with customers and lender about funding and orderly transition of production to other manufacturers
  • Negotiated successful access and accommodation agreement with key customers
  • Funded an orderly transition to other manufacturers with company’s two largest customers, which together represented 75% of sales volume
  • Entered short-form agreement with remaining customers who paid premium pricing to transition their products to other manufacturers
  • Provided financial management and planning as well as led regularly weekly meetings with key stakeholders

 The Results

  • All customers successfully transitioned their products to other manufacturing locations without supply interruptions
  • Real estate was surrendered to owner for new tenants
  • Senior secured lender was paid in full
  • Board of Directors and owners were able to exit investment without lawsuits or problematic claims

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