Case Study

Xtreme Power

CLIENT: Xtreme Power

Gordian Group acted as investment banker to Xtreme Power for the purpose of obtaining financing for the Debtors’ Chapter 11 proceedings and running the fast-track Section 363 auction process of the Debtors’ assets.

Situation

Xtreme Power (“XP” or the “Company”) was a venture-backed company in the energy sector that supplies real-time power management and energy storage systems that enable a more sustainable, cost-effective and reliable electric grid. The Company is located in Austin, TX and operates and maintains grid-scale energy storage systems throughout the United States.

After having more than $100 million of capital invested over a period of years, issues such as operating problems, a general market slowdown, and a fire at one of Xtreme Power’s energy storage facilities caused XP to experience severe liquidity problems in 2013.

After bridge financing fell through, days before cash ran out in January 2014, the Company was facing an imminent Chapter 7 liquidation.

Engagement

Replacing the Company’s investment banker on the eve of a liquidation, Gordian served as investment banker to Xtreme Power for the purpose of obtaining financing for the Debtors’ Chapter 11 proceedings and running the fast-track Section 363 auction process of the Debtors’ assets.

Outcome

Gordian was successful in soliciting and negotiating DIP financing that averted a liquidation in January 2014 and provided some runway to try and achieve a going-concern sale. In addition, several weeks later, the DIP lender agreed to an improvement of terms, an increase in timeline, and to act as the Stalking Horse, or lead bidder, at Gordian’s request, and as an accommodation to the sale process.

With the increased sale process runway (from five weeks to about nine weeks), Gordian utilized the Court-approved bid procedures to bootstrap the Company to an above-market, all-cash transaction, about 3x higher than prevailing market indications of cash value, to a European strategic buyer. All in, Gordian successfully raised financing and completed a sale of Xtreme Power, despite XP having been on the verge of liquidation about two months prior, lacking any cash, any financing and any third-party buyer.

To summarize: in a “Hail Mary” sales process of little more than 60 days, Gordian Group was able to achieve a tremendous result, with a sale price that was roughly 3.5x trailing twelve months revenue.