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)

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

Overview