Lateral-g Forums - MSD files Chapter 11

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Quote:

Originally Posted by MarkM66 (Post 504626)

But it is a 3 year old post. So things may have changed. I'd like to see an update from MSD.

I doubt if you hear from MSD, because they are filing chapter 11.
Here is the reason, they want a buyer. http://www.law360.com/articles/47054...ves-into-ch-11

Quote:

Law360, Wilmington (September 06, 2013, 2:23 PM ET) -- Aftermarket high-performance auto parts maker MSD Performance Inc. filed for Chapter 11 protection Friday in Delaware, aiming to sell the business as a going concern and after making several acquisitions at the top of the cycle that left it with a high debt burden and liquidity constraints. MSD listed between $100 million and $500 million in debts against $50 million to $100 million is assets, and its filing comes the same day a forbearance agreement with lenders was due to expire.

The company tried to sell itself to Z Capital MSD LLC in 2012, but lenders didn't come to a consensus on the deal, and MSD is hoping it will have better luck with a marketing process while under court protection, according to a bankruptcy declaration from CEO Ron Turcotte.

“The company submits that the best path forward is a court-supervised sale and marketing process,” the declaration said. “Running a marketing process under court supervision will enable the debtors to maintain their ongoing businesses and preserve the jobs of their approximately 450 employees.”

MSD listed debts that include $102.5 million in senior secured term loans, with $91.9 million outstanding, from a group of lenders originally led by Antares Capital Corp., as well as about $4.6 million in trade debt and nearly $1 million left outstanding on a noncompete agreement with a consultant from one of the companies it acquired in the 2000s. Since May, Z Capital has been buying much of the debt from the term loans and replaced Antares as the loan agent in June, according to the declaration. Well-known to drag racing fans and hot rod enthusiasts, MSD was founded in 1970 as a research and development company by two engineers, according to court records.
From there, the company, headquartered in Texas, grew to be one of the dominant market forces in custom aftermarket ignition systems, expanding into other products such as spark plug wires and fuel injection systems, court records show.

It also produces components for other racing vehicles such as motorcycles, jet skis and powerboats, and many of its parts have been used by professional auto racing drivers in the Nascar and National Hot Rod Association circuits, according to the declaration. The wheels toward bankruptcy were set in motion in 2005, when MSD began a series of acquisitions that turned out to be at the top of the business cycle, with matters worsened by the 2008 economic crisis, the declaration stated. The company picked up U.K.-founded and Florida-based engine software developer Superchips, as well as drag racing parts manufacturer Racepak and aftermarket performance-enhancing module maker Edge Products in a series of deal in the mid-2000s. But at about the same time, the industry saw explosive growth that crowded the market and suppressed margins, causing sales and profitability to take a hit, the declaration said.

The company went through a restructuring in 2009, but gross margins continued to decline despite growing revenues, and healthy earnings were offset by a significant debt burden that restricted liquidity and limited growth opportunities, according to Turcotte. In an attempt to sell as a going concern, the company shopped itself to 200 potential buyers that resulted in 100 nondisclosure agreements, and ultimately a letter of intent from Z Capital, which bought the bulk of MSD's secured debt, according to the declaration. MSD says it intends to continue negotiations with Z Capital through the bankruptcy process, but does not appear to have secured a stalking horse buyer from its early filings.

The company adds that getting to an auction is crucial, contending the case has the potential to free-fall into a Chapter 7 proceeding absent a sale process. Early filings do not seek approval for a bankruptcy loan, with the company intending to fund the process with cash collateral. The case has been assigned to U.S. Bankruptcy Judge Peter J. Walsh and is scheduled for a first-day hearing Monday in Wilmington.

MSD is represented by Daniel J. DeFranceschi, Paul N. Heath, Zachary I Shapiro and Amanda R. Steele of Richards Layton & Finger PA.

The case is In re: MSD Performance Inc., case number 1:13-bk-12286, in the U.S. Bankruptcy Court for the District of Delaware.

Jeff

Anybody want an MSD distributor?

:underchair:

Appears to be good news:

MSD Revved Up for the Future with new Owner Z Capital

El Paso, TX; December 16, 2013 - MSD Performance Group ("MSDP"), one of the world leaders in vehicle aftermarket performance parts, announced today that the company has been acquired by Hot Rod Brands, LLC an affiliate of Z Capital Partners, LLC ("Z Capital"). MSDP sells products under the MSD, Racepak, Powerteq, Edge and Superchips brands. MSDP filed a voluntary Chapter 11 bankruptcy protection petition on September 6th of this year.

Z Capital is a private equity firm with approximately $1.2 billion of regulatory assets and committed capital with offices in Lake Forest, Illinois and New York, New York. The firm specializes in investing in companies with a strong product line and top tier brand recognition. The group leverages its operational expertise in actively working with the management teams of their portfolio companies to enhance enterprise value.

"We are excited to add MSDP to the Z Capital portfolio of companies and believe it to be a terrific growth platform. We will work with the management team to continue to be a market leader and deliver cutting edge products to our loyal customer base. MSDP represents substantial brands within the performance segment and we look forward to further solidifying and growing that brand recognition," said James J. Zenni, President and Chief Executive Officer of Z Capital.

MSD Performance looks forward to the future as the combination of a stronger balance sheet and focused ownership will allow for an even greater ability to serve consumers with exciting new products and technology. In recent years MSD Performance has expanded its portfolio of products and technology including the award-winning Atomic brand Fuel Injection systems, Flashcal brand Jeep hand-held programmer, Vigilante brand Harley tuning products and this year's SEMA Show introduction of Brainwave®, the new Vehicle Management Network that allows aftermarket components to utilize a common technology platform for complete vehicle communication.

Ron Turcotte, MSDP's CEO, said "Our restructuring allows us to be positioned for substantial growth through an even greater ability to serve our customers with new, innovative product offerings and a higher level of customer service."

Over the last few years MSD Performance Group has been the Innovation Leader in game-changing technology for the aftermarket. SEMA supported this belief with the recognition of Todd Petersen- MSDP Chief Innovation Officer- as this year's recipient of the Gen-III Innovation award. For more information contact Manny Grigalva at [email protected].

About MSD Performance, Inc., headquartered in El Paso, Texas, operates in the street enthusiast, professional racer and powersports markets where we maintain industry leading market share positions across all of our product categories under the MSD®, Racepak®, Superchips® and Edge® brands. You can shop our products online at www.msdperformance.com, www.powerteq.com and www.racepak.com, or visit one of our many automotive and performance distributors across the country.

Quote:

Originally Posted by Sieg (Post 523127)

Don't get too excited. I googled Hot Rod Brands LLc & didn't find anything.

Then I googled Z Capital & this is their Portfolio the only other Auto related company was Exide. The others are Food & Gaming Companies

https://www.zcap.net/ZcapitalWebsite/Portfolio.aspx

Usually these "distressed for control" buyers -- basically just take the company over from the credit holders of the bad debt - they rarely put anything down.. and never put any real cash IN to the company -- Companies like this (MSD) usually go down because they're burdened with debt. The leveraged buyout guys come in because they have a track record of being able to turn a company around…

Well - that's usually fairly easy to do with a clean balance sheet… after a BK filing. It's like WTF -- Take your own personal situation…if you could still live in your house now owned debt free - drive your brand new car with no payment - and have nothing but net positive cash flow -- you'd look pretty damn good too! LOL

Sometimes they (the buyers) just take all the cash flow out and take it up to the "board room"… and the companies they've taken over languish.

Let's hope that's not the case here… because they have some decent names in the bag. None of which are particularly stellar anymore - take Exide batteries for starters (is that a pun?) - they used to be "the" name it top quality batteries - that is til they (previous mgmnt) levered up the ol' balance sheet and couldn't pay it back. So typical. Chevy's is the dog food of Mexican joints… and so on.

Let's hope they just took over MSD to do a restructured balance sheet clean up and sell it to a REAL automotive conglomerate like Edelbrock or similar.