Phoenix serves as financial advisor to a manufacturer of electrical products and sells the Company to a strategic buyer.
Our client was a $27 million Manufacturer of High-Tech Electrical Products for the power generation industry and magnetic resonance imaging products for the medical products industry based in Pennsylvania.
A severe downturn in the power generation sector caused by a sharp increase in energy costs, coupled with a questionable expansion into the medical products caused a cash flow reduction that created the inability for the Company to maintain adequate debt service.
Phoenix was retained by the Company’s secured lender to manage its collateral after they had agreed with management to take “peaceful possession” of the assets. Phoenix created a build-out plan involving specific customer orders that could be brought to completion in a short time frame, thus converting inventory to cash. Phoenix also identified a highly convertible asset in the Work in Process inventory. Customers who became aware of the orderly liquidation of the company, purchased their in-process orders for transmittal to third parties for completion. The process was extremely cost effective for the customer in comparison to starting the project from the beginning at another source. Phoenix ultimately identified a strategic buyer from outside the United States, who wanted to gain entry to the U.S. market, for the remaining assets of the Company. A secured party sale was completed in four weeks and the secured lender was able to eventually recover its entire position.
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