Gordian served as investment banker to Wellman for the purpose of running the Section 363 auction process of the Debtor’s assets.
CLIENT: Wellman Dynamics
To effect a value maximizing exit from an over 18 month bankruptcy process, Gordian orchestrated a successful 363 auction process and ultimate sale for ~16x LTM EBITDA, including the assumption of approximately $25 million of liabilities.
Wellman Dynamics Corporation (“Wellman” or the “Company”) is a leading manufacturer of precision aerospace magnesium and aluminum sand castings, serving multiple, major suppliers of both commercial and military helicopters and jets worldwide.
While the Company has had a successful, historical financial and operational track-record, the decline in oil prices and drawdown in Middle East activities, in addition to its balance sheet / environmental obligations and lack of equity capital, have limited the Company’s ability to re-invest its free cash flow and grow the business.
In September 2016, the Company filed for chapter 11. Following difficulty in obtaining the requisite exit financing to effectuate its proposed plan of reorganization, Wellman decided to pursue a sale of its assets through a section 363 auction.
Gordian was successful in securing for the Debtor both (A) a buyer for the Company for a purchase price of in excess of $50 million in cash, credit and assumption of liabilities and (B) a credible backup bidder in the form of a strategic competitor at a purchase price of in excess of $40 million (including $24 million in cash at closing for the Company), notwithstanding $3 million of last twelve month (“LTM”) EBITDA.
This outcome was all the more successful in light of the circumstances facing Gordian’s process, including (i) a Company that was severely cash constrained, was unable to support its pre-existing debt burden, faced significant obligations relating to its on-site environmental liabilities, and lacked any financing or any third-party buyer prior to Gordian’s retention, (ii) a “bar” for third parties to was uncertain for months (and was raised at times throughout the process), and (iii) complexities related to the Stalking Horse Bidder’s position as Wellman’s secured lender (including getting third parties comfortable with whether the Stalking Horse Bidder was a “buyer” or a “seller” and the credit bid overhang that existed).