The Company is a privately held aluminum foundry located in north central Ohio and is a low to medium volume, sand and permanent mold jobbing foundry that manufactures aluminum cast products and provides a variety of after-cast services to small to large OEM’s throughout the U.S. Prior to the economic downturn in 2008, the Company historically shipped between $8-$10MM annually in aluminum cast products and after-cast services. From 2009 through early 2012, the Company experienced declining revenue and losses as it tried to recover from the broad financial impacts of the economic downturn. The Company had been operating in a cash crisis during much of 2010 through early 2012. In May 2012, the Company recognizing it needed outside help to maintain its viability, retained Turning Point Management Advisors, LLC (“TPMA”) to formulate and lead a financial and operational restructuring.
The Company was operating under a forbearance agreement with the Bank as it was several months behind on its loan payments. In early July 2012, TPMA presented its turnaround plan to the Bank. Bank representatives agreed with the plan and indicated they would support TPMA efforts as long as progress was being made financially and they felt their collateral was being protected.
Due to the Company’s continued drop in sales in late 2012 and into 2013, the Company was forced to further delay payments to the Bank. The Bank continued to support the turnaround effort, but it was determined by the Bank and TPMA the best course of action was to sell the Company’s assets allowing some recovery for the Bank and give the employees a fresh start with a new entity.
TPMA continued its turnaround effort ensuring the Company remained operational and cash flowed from operations. TPMA targeted financial and strategic buyers. One party emerged from the process as a willing buyer and a Letter of Intent (“LOI”) was signed in June 2013.
While the transaction financing and APA contingencies and lien settlement negotiations were being addressed, the Company continued to operate but at less than breakeven cash flow revenue levels. Despite pushing vendor financing to a significant level, the Company was unable to fund its operations without additional financing. TPMA approached the Bank and they agreed to provide a bridge note to the Company if the President/majority shareholder would provide additional collateral.
Prior to closing several liens against the company needed to be addressed. All liens were negotiated and settled for cents on the dollar providing clean title to the assets for the Buyer.
The Company asset sale was successfully completed in 2014 with clean title to the assets provided to Buyer as all liens were settled prior to closing and all environmental issues were remediated on the property. The Bank, the Company’s first secured creditor, was repaid the entire debt owed to them. The Company (NewCo) under a new name and ownership had a fresh start with a reasonable debt load and no vendor debt overhang. All jobs were saved in a small town in Ohio.