Gordian Group acted as investment banker to Axion in its successful sale and reorganization.
Case Study
Axion International Holdings
CLIENT: Axion International Holdings
Business Profiles
Situation
Axion International Holdings, Inc. (“Axion” or the “Company”) was a public, growing, environmentally conscious company that used proprietary green technology to transform post-consumer and post-industrial waste plastics into large scale durable products including structural building products, construction mats and railroad ties. The Company’s products were used in the world’s first effective, recycled plastic railroad and bridges and established dominance in the plastic rail ties market. The Company was located in Waco, TX and Zanesville, Ohio.
The Company’s growth plans were reliant on funding in large part provided by significant secured and unsecured loans made by three angel investors who also served as, or had a representative serve as, board members. Funding was cut short by such investors, which created a liquidity crisis. The Company, without counseling Gordian, its pre-petition banker, filed for bankruptcy in conjunction with proposed DIP financing from one of the angels (the “Angel”). The DIP loan was linked to a fast-track sale process with the Angel acting as lead bidder. The proposed transactions experienced heightened scrutiny and creditor backlash due to their inside nature and the Company’s pre-petition process. The case was also plagued with litigation, including lien challenges, and a possible administrative insolvency.
Engagement
After Gordian led the charge to challenge the proposed DIP and lead bidder arrangements, Gordian was hired subsequent to the bankruptcy filing to serve as investment banker to Axion for the purpose of developing and exploring exit plan options.
Outcome
| Gordian was successful in assisting to stave off a liquidation and in negotiating a global settlement (the “Global Settlement”) with the DIP Lender/Angel, the Debtors, professionals and unsecured creditors committee, which provided for (i) funding by the Angel for unsecured creditors, resulting in significant recoveries to unsecured creditors, (ii) sufficient DIP financing to bridge to an exit and cover administrative claims, (iii) settlement of the litigations that plagued the case and (iv) an exit structure, which involved a fast track 363 sale process.
At Court direction, Gordian ran a fast and thorough sale process to give comfort that the sale process was fair. The case was resolved elegantly through a creative approach – a Plan of Liquidation coupled with a 363 sale of Axion’s businesses to an entity owned by the Angel, thus, (i) allowing the management team to maintain jobs and, together with the Angel, to retain significant upside and (ii) facilitating future funding, due to a clean capital structure, with such funding allowing for the requisite growth to bridge, hopefully, to further investment interest in the medium term. |