Electrical Connectors

• Company acquired a manufacturer of electrical components primarily to automotive industry
• Facility experienced significant post-close integration issues and revenue declines due to loss of customers
• Company’s private equity sponsor commenced a sale process, which it discontinued when no suitable buyer emerged
• With only a few weeks of available liquidity to support business and no further funding available from sponsor, CR3 Partners was retained to evaluate company’s options

The Work

• CR3 partnered with senior management to develop an out of court wind-down plan of business where key customers would support plan by paying surcharges on their products in return for receiving sufficient supply while transitioning to alternate suppliers
• Verified which customers would agree to surcharge pricing based on criticality of their products and negotiated accommodation agreements to finance wind-down plan
• Developed cash forecast to manage cash disbursements and allow for customers to monitor wind-down process
• Negotiated with company’s senior lender on repayment of its outstanding term loan and receivable factoring arrangement

The Results

• Out-of-court process allowed for orderly wind-down of business
• Key customers who entered accommodation agreements received continued product supply while they transitioned to permanent supplier
• Key management and manufacturing employees were retained so that production was not disrupted
• Sale of European operations to management buyout team provided employees with continued employment while minimizing liabilities to parent company
• Senior debt and unsecured claims were paid nearly in full
• Private equity sponsor received maximum value with spin-out of a subsidiary