Lateral-g Forums - MSD files Chapter 11

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MSD files Chapter 11

From their facebook post:

https://sphotos-b-sjc.xx.fbcdn.net/h...63692470_n.jpg

Straight from us here at MSD
Just in case you guys have heard any rumors, here it is.

MSD initiates voluntary Chapter 11
http://www.msdperformance.com/defaul...393&blogid=429

yes I received notice earlier today, its a bummer but there saying its for reorganization

The $40 "made in china" distributor copies sold on ebay must be taking their tole. :flag2:

Quote:

Originally Posted by MarkM66 (Post 503523)

The $40 "made in china" distributor copies sold on ebay must be taking their tole. :flag2:

half of MSD's line is made in China also

Yep, I was bummed when i got a new Blaster2 coil and it was made in China.......

I've known I more than one brand new distributors rusting inside horribly bad within a couple months. Figured they went overseas. :shakehead:

Ive been usong msd products since the mid 90s and myself and most people i know have been stranded by a msd dead coil/box, they have always been hit or miss since ive used them

Here's the scoop on the MSD story Chad just posted about it after talking to MSD.... hope this helps everyone understand
MSD Bangshift Story

That Bangshift story and the Press Release was comical.

Quote:

Originally Posted by transam (Post 503819)

Ive been usong msd products since the mid 90s and myself and most people i know have been stranded by a msd dead coil/box, they have always been hit or miss since ive used them

There was a time when MSD stood for May Suddenly Die. I know some guys carried the stock parts with them so they could get home when the MSD failed.

The first time I ever took laps in a stock car, went maybe 15, and MSD went out. I bet I bought 10 boxes for 1 of my cars, before we got out of racing. I always had 2 extra boxes on the hauler. Looking back, I don't know why we never tried another brand?

Doesn't MSD own Race Pack as well? If so not good.

Quote:

Originally Posted by ratman67 (Post 503816)

if it was union made here in the u.s., it would cost three times as much and have half the service life...lol

Actually, my 17 year old MSD distributor is still going! I sold the engine to my engine builder and he was really happy that it had USA made MSD distributor in it.

Jeff

The first MSD 6AL that I installed in Dust Off lasted a about a week once I started driving the car. The replacement 6AL has been working fine for a the past year and a half now.

Quote:

Originally Posted by Che70velle (Post 503953)

MSD had to have loved this. You are among many many people. So why did they love it? Think about it, who else in this market could sell a product, it fails and people not only buy another one from them, but 10 or 11 in some cases. No wonder they never improved the design! Their sales would have plummeted had they improved the product to a degree that you didn't have to buy at least one backup. The NASCAR teams even had a backup under the dash to switch to. (For other reasons also). :G-Dub:

Anybody see the article in the latest Hot Rod about "knock offs". Some of the article was specific to MSD ignition boxes. I wonder how many of the failures were knock-offs?

Quote:

Originally Posted by mfain (Post 504177)

Anybody see the article in the latest Hot Rod about "knock offs". Some of the article was specific to MSD ignition boxes. I wonder how many of the failures were knock-offs?

I never saw the article, but it is common to do knockoff's in China. Here is an article on copycat towns. http://www.theworld.org/2013/05/china-copycat-towns/. Do a google image search and you see lot of copycat products.

As for MSD, according to their president of the MSD. http://www.yellowbullet.com/forum/sh...=275621&page=6 only a few parts are made in China.

Jeff

Quote:

Originally Posted by mfain (Post 504177)

Anybody see the article in the latest Hot Rod about "knock offs". Some of the article was specific to MSD ignition boxes. I wonder how many of the failures were knock-offs?

Saw that artice. I wonder of knock off makers will step up their "copy cat" game now...

Quote:

Originally Posted by Sparks67 (Post 504482)

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

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.