Electrical Connectors

The Situation

  • 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

Role(s)

  • Financial Advisor

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

Back to case study search

Overview

  • Manufacturing
  • Finanacial Advisory

Engagement Team