[Sparks67]

Originally Posted by MarkM66

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

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