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Case Studies Automotive

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Driving Long-Term Value

The Engagement

Conway MacKenzie worked for a $500 million privately-owned Tier 1 automotive supplier of highly engineered, complex metal formed and machined components. The challenges included a liquidity crisis resulting from over leverage, OEM market share erosion, financial covenant defaults, under-performing facilities and products outside of core competence.

Our Role

Conway MacKenzie performed an assessment of the business plan and key drivers including customer/product profitability study and capacity utilization. Conway MacKenzie worked closely with the company’s management team and customers to execute the business plan including resourcing of products and close under-performing facilities.

The Result

Conway MacKenzie’s involvement resulted in significant and meaningful key customer support including award of new business necessary to attract invested capital and complete a balance sheet restructuring as well as the resourcing and closure of the production facility in six weeks. The company was able to avoid a bankruptcy filing for this facility while creating a net gain for the parent company. Conway MacKenzie gained major customers’ support with new book of business in turn for acceptance of current contracts and provided the company with customer/product profitability analysis to support on-going business initiatives.

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Shifting From Low Gear to High Gear

The Engagement

Conway MacKenzie has played a leading role in some of the most significant automotive restructurings and transactions during the last quarter century. The world’s largest publicly traded auto supplier at the time was facing issues that afflicted much of the domestic automotive industry – excess capacity, slackening demand and crushing legacy liabilities. These challenges led it to seek protection under Chapter 11 of the Bankruptcy Code. Revenues had grown $30 billion prior to Chapter 11. After three years in bankruptcy, a transaction involving a hedge fund failing to close would have resulted in the company’s emergence from bankruptcy.

Our Role

Conway MacKenzie was engaged as Financial Advisor to the largest DIP Lender, eventually working with other DIP Lenders’ advisors to help the company emerge from Chapter 11. The Conway MacKenzie work plan was executed in four distinct but strategically connected phases that ultimately resulted in a consensual transaction, maximizing value for all stakeholders and avoiding disruption in supply to major customers:

  • Developed independent views of liquidation values of the company to support arbitration process
  • Performed financial, operational, and strategic due diligence
  • Developed business plans and cash flow models to support multiple transaction scenarios required to bring key stakeholders to the negotiation table
  • Integrally involved in key stakeholder negotiations, including U.S. Treasury and GM
  • Assisted with capital raising to support required financing for each transaction scenario
  • Prepared with counsel for potential adversary proceedings
  • Provided financial and analytical support for all post-closing work streams
  • Assisted in development and implementation of post-emergence action plans

The Result

The company successfully emerged from Chapter 11 as a $10 billion automotive supplier with significant operations in North America, Europe, Asia, and South America.

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