Elyria Foundry

Situation

The Company had an upcoming liquidity crisis with the impending maturity of more than $120 million of  debt, > 6.0x trailing EBITDA.

Engagement

Gordian was engaged to provide advice in connection with the impending maturity.  While a small piece of the outstanding debt was in the form of a revolver, the bulk of the debt was comprised of second lien notes, of which a loan-to-own hedge fund (with other strategic interests in the space) owned close to 90%.

Outcome

Following several months of off-and-on discussions with the hedge fund (who had taken the position early   on that they required control in any consensual transaction), the negotiating dynamics shifted after   Gordian effected a transfer of the revolver to a more aggressive senior lender that was willing to convert   the revolver into a term loan, effectively pre-funding any potential bankruptcy.

• • As soon as negotiations recommenced however, a fire at the company’s primary facility in late 2012 caused significant production disruptions that created further uncertainty.
  • Ultimately, Gordian and the company were able to negotiate a consensual restructuring with 100% of the note holders that:

• Avoided a bankruptcy filing;
• Included only 10% dilution to the private equity sponsor (provided the notes are paid off prior to maturity); and
• Extended the maturity by close to two years, providing time for the client and private equity firm to reduce leverage and increase shareholder value.