Case Study

Lexington Precision

CLIENT: Secured Lenders

Gordian Group served as financial advisor to the senior secured lenders to Lexington Precision to explore exit options that resulted in a favorable outcome and emergence from bankruptcy.

Business Profiles

Situation

Lexington Precision is a manufacturer of rubber and metal products: the Rubber Group manufactures primarily ignition wires, insulators, and connector seals for automotive original equipment manufacturers (“OEMs”) and the automotive aftermarket, as well as parts for healthcare products for medical manufacturers; and the Metals Group manufactures machined metal components from aluminum, brass, steel, and stainless steel bars, forgings, and cold-headed blanks. The Company filed for Chapter 11 bankruptcy protection after a significant deterioration in operating and financial performance, in part as a result of the downturn in the domestic auto industry.

Engagement

After more than a year in bankruptcy, the termination of the Company’s exclusive right to file a Plan of Reorganization and uncertainty over an acceptable exit strategy for the Secured Lenders, Gordian was engaged by the Secured Lenders to develop and explore exit options, including the potential sale of the Company’s assets or providing exit financing in connection with an internal plan of reorganization.

Outcome

After several months of contentious court proceedings, including the filing of competing Plans of Reorganization, a consensual deal was negotiated between the Company, the Company’s unsecured bondholders (including a private investment fund that had acquired a majority position in the unsecured bonds) and our client that contemplated meaningfully improved economics for our client following emergence, as well as an additional equity investment by the private investment fund to further stabilize the business – all of which significantly enhanced the credit profile of our client’s loan. The Plan was confirmed on July 21, 2010, and the Company emerged from bankruptcy on July 30, 2010.