Spanish Industrial Fasteners Manufacturer
Strategic Advisory / New Market Entry Workout / Restructuring
Client: International manufacturing cooperative formed in 1961 and based in Spain, which operated 4 units: i) Door & Gate Automation Systems, ii) Automatic Doors; iii) Precision Plastics and iv) Fastening Solutions (“Client”).
Investment Target:
During 2009, the Fastening Solutions SBU created a distribution joint venture with a US partner, created a new business structure, including personnel, equipment, warehouse space and customer contacts. The JV entered new markets, funded expansion efforts and financed inventory for new business lines. By 2012, the US joint venture partner had overleveraged other parts of their non-JV business and faced a financing and operational squeeze.
Deal Overview:
Izar Capital executed a consensual operational and financial workout with the US JV partner, achieving 100% payout of the amounts owed to the Client, as well as an ongoing operational consulting role for the Client into US JV partner’s existing business.
Key Solutions / Deal Highlights:
Investment Target:
During 2009, the Fastening Solutions SBU created a distribution joint venture with a US partner, created a new business structure, including personnel, equipment, warehouse space and customer contacts. The JV entered new markets, funded expansion efforts and financed inventory for new business lines. By 2012, the US joint venture partner had overleveraged other parts of their non-JV business and faced a financing and operational squeeze.
Deal Overview:
Izar Capital executed a consensual operational and financial workout with the US JV partner, achieving 100% payout of the amounts owed to the Client, as well as an ongoing operational consulting role for the Client into US JV partner’s existing business.
Key Solutions / Deal Highlights:
- Engaged in direct, immediate and in-person dialogue with US JV partner on the local operational site; began to build credibility around the workout process lost during the Client’s direct discussion with US JV partner.
- Created base case internal cash flow model for scenario testing various sensitivity outcomes; gained consensus agreement among all parties on actual amounts in question
- Negotiated and structured the conversion of existing amounts owed (senior and subordinated claims) into payments from US JV partner pari-passu with US JV partner- owners LLC draws on a 1 for 1 basis; ie, if the owners draw a guaranteed payment or salary, the Client received equal dollars on a 1 for 1 basis.
- Created ongoing consulting arrangement to exercise oversight and provide guidance and counsel to US JV partner
- Allowed Client an open door to re-initiate a mutually beneficial future business relationship at a future point in time