CASE STUDIES

What we have done for others; and what we can do for you...

Case Studies

Read more

The Company: Tier 1 Automotive Supplier
Tier 1 Automotive Supplier (“Tier 1”) is a leading, global supplier of innovative fluid storage and delivery systems to automakers worldwide with annual sales of approximately $3.0 billion.

The Role:
To advise the 1st Lien Lenders (approximately 17 par and distressed investors and hedge funds in U.S. and Europe).

The Issue:
The unprecedented slump in the global automotive sector that began in 2008 posed serious challenges to the survival of Tier 1. The Company needed to complete an operational restructuring and to find a capital structure solution so it could survive the economic downturn.

The Outcome:
Asgaard advisors worked closely with the debtor and its investment bank to do the following:

  1. developed a comprehensive 5-year operating model that served as the foundation for the Company’s strategic business plan and budget;
  2. assisted in negotiations with various constituents (i.e., revolvers, second liens and equity holders);
  3. analyzed all proposals made by the Company and revolvers,
  4. assisted with intra-group communications and evolving stakeholder dynamics; and
  5. helped build consensus as to the ultimate course of action.

Consequently, Tier 1 reached an agreement with the required members of each tranche of the capital structure to effect an out-of-court restructuring: the revolvers rolled their debt and the 1st Lien Lenders exchanged approximately $700 million in senior secured notes for common equity, largely wiping out all junior stakeholders (e.g. debt and equity). Tier 1 was also successful in effecting a consensual restructuring of its senior revolving credit facility.

Read more

The Company: RVSI Inspection LLC
RVSI Inspection LLC (“RVSI”) was one of two worldwide manufacturers of back-of-the-line inspection equipment used in the manufacture of semi-conductor chips.

The Role:
To advise the Company on all aspects of the Chapter 11 case and represent them in the sale of the business pursuant to section 363 of the United States Bankruptcy Code.

The Issue:
RVSI was experiencing wrenching contraction issues as the semi-conductor industry hit a particularly steep and prolonged drop in production, a problem further exacerbated by a dispute with one of RVSI’s two main end customers.

The Outcome:
Asgaard advisors successfully closed a 363 sale despite staggering top and bottom line losses, daily warfare within the management ranks, and a particularly toxic relationship with its secured lender where imminent liquidation was a constant threat.

This was accomplished notwithstanding a very material IP claim on the company’s core technology.

Read more

The Company: Acuity CiMatrix
Acuity CiMatrix was the principal inventor of a three-dimensional data matrix, as well as a manufacturer of digital readers and cameras used in a wide variety of industrial applications.

The Role:
To advise the Company on all aspects of the Chapter 11 case and represent them in the sale of the business pursuant to section 363 of the United States Bankruptcy Code.

The Outcome:
Negotiated, signed and closed on a 363 stalking horse bid with Siemens Energy & Automation, Inc. a unit of Siemens, which was over twice the price of the next qualified bid.

Read more

The Client: Riverstone Networks, Inc.
Riverstone Networks, Inc. (Riverstone), based in Santa Clara, California, was a leading provider of carrier Ethernet infrastructure solutions. Riverstone’s Ethernet metro-edge router portfolio of products allowed carriers to meet the voice, video and data service requirements of their customers by connecting their traditional switched network to an Ethernet-enabled VOIP and data IP.

The Role:
To advise the Official Committee of Equity Security Holders on all aspects of the Chapter 11 case. In particular to:

  1. review and certify the Company’s pre- and post-filing marketing efforts;
  2. independently identify and contact potential buyers believed to have the ability to submit a Qualified Bid by the bid deadline; and
  3. assist the debtors and their advisors with running a competitive auction process.

The Issue:
On February 7, 2006, the Company and four of its affiliates filed for Chapter 11 protection under the Bankruptcy Code with a stalking horse bid from Lucent that required the completion of the secondary marketing process within 4 weeks of the stalking horse bid with the bankruptcy auction to be held on March 23, 2006.

The Outcome:
Asgaard advisors worked closely with the Debtors, the Creditors’ Committee and their respective advisors to develop and implement a strategy to improve both price and terms set forth in the stalking horse bid. As a result, the Debtors were able to improve Lucent’s bid by 22% at the auction.

Read more

The Company: BearingPoint

The Client: Deloitte LLP

The Role:
To serve as the financial advisor to Deloitte LLP, the successful stalking horse bidder for BearingPoint’s Public Service Business.

The Issue:
Following an extensive sales process, on February 18th, 2008, BearingPoint filed for Chapter 11 bankruptcy protection. Despite a reported prearranged restructuring plan, Deloitte was able to convince the Debtors and senior lenders to move to a 363 sale process, at least with respect to BearingPoint’s Public Services Group (the “Group”). Within 30 days of the commencement of the engagement, on March 23rd, Deloitte entered into a definitive agreement with BearingPoint to purchase substantially all of the assets of the Group out of bankruptcy for $350 million in cash and the assumption of certain liabilities, subject to adjustment.

As the stalking horse bidder, Deloitte was concerned about the overall state and moral of the Group’s employees and clients, and thus sought to accelerate the sales process and closing in order to preserve value and maximize retention of the existing employee base.

The Outcome:
Asgaard advisors worked closely with Deloitte’s legal counsel to navigate the bankruptcy process so that the time period between the initial bid and competitive bid dates was limited to approximately 2 weeks. Ultimately, the April 15th auction was canceled as no competing bids were proffered. On April 17th, 2008, the bankruptcy court approved the bid by Deloitte and the transaction closed on May 8th.

Professional services during this engagement included:

  1. the analysis and valuation of assets and liabilities of the Public Services Group of BearingPoint;
  2. the development of extensive operating and cash flow models (approximately 2,800 contracts), done in collaboration with Deloitte’s senior leadership and Transaction Services team; and
  3. assistance in negotiating and structuring the acquisition.
Read more

The Company: Allied Defense Group, Inc.
The Allied Defense Group, Inc. (“ADG”) was a publicly traded, multinational defense business with multiple subsidiaries operating in the U.S. and Europe.

The Role:
To represent the Company in the restructuring of approximately $30 million in senior subordinated convertible notes resulting from a failed convertible PIPE transaction and to supervise M&A sale processes for its subsidiaries.

The Issue:
Due to delays in new orders related to ammunition and weapons contracts, ADG began to experience a significant disruption during the 2Q of 2007 with sales declining more than 50% year over year. The deterioration in financial performance resulted in an event of default under the Company’s existing convertible note agreement.

The Outcome:
Asgaard advisors successfully restructured the toxic PIPE allowing the company to sell and/or restructure its American and European subsidiaries. They also advised on the sale of several of ADG’s subsidiaries, including:

  1. The VSK Group, a global leader in security surveillance systems;
  2. Global Microwave Systems, a California based manufacturer of satellite antennae and transmissions systems; and
  3. Titan, a U.S. manufacturer of pyrotechnic devices for the U.S. military.

Advisors helped ADG explore strategic alternatives in relation to its American and European subsidiaries.

In Phase I, ADG successfully:

  1. recapitalized its senior subordinated convertible notes (“Original Notes”) in the principal amount of $30 million and related warrants;
  2. resolved all outstanding disputes with its bondholder group represented by four financial institutions;
  3. exchanged the Original Notes for new senior secured convertible notes and common stock of the Company; and
  4. received $15 million in new funding from existing bondholders.

Over the succeeding 2 years, ADG sold several of its subsidiaries, using the proceeds both to reduce and ultimately pay off in full the amounts due the bondholders, and to support the recovery of the Company’s remaining munitions business. Ultimately, the holders of the Original Notes were paid in full and equity riding through unimpaired.

Read more

The Company: Hancock Fabrics
Hancock Fabrics, Inc. (OTC: HKFI), operates as a specialty retailer of fashion and home decorating textiles, quilting materials, sewing accessories, needlecraft supplies and sewing machines.

The Role:
To represent the company and advise them on Chapter 11 Reorganization. At the inception of the engagement, the Company operated one of the largest fabric retail chains in the United States, with approximately 450 stores in 37 states.

The Outcome:
Hancock Fabrics, Inc. is one of the only national retailers to emerge successfully from bankruptcy as a reorganized entity with creditors getting paid in full and equity unimpaired since the 2005 amendments to the Bankruptcy Code.

Within the initial 120 days of the engagement, the Company’s first comprehensive four-wall analysis was completed along with a comprehensive business analysis and turnaround plan. The advisors subsequently secured $120 million in exit financings, comprised of a $100 million revolving credit facility provided by G.E. Capital and $20.0 million in second lien secured notes provided by existing equity investors in a fully-backstopped rights offering.

Hancock Fabrics successfully emerged from Chapter 11 bankruptcy in August 2008. Pursuant to the Plan of Reorganization, which had the support of both the creditors’ and equity committees, creditors’ allowed claims were paid in full, with interest, in cash on the Effective Date. Equity holders also retained their interests in the Company with the stock trading at $1.84 per share on the Effective Date. Equity had traded as low as $0.61.

Due to the outstanding results, the advisors in this transaction won a Turnaround Atlas Award for their role in the restructuring. The Global M&A Network presents the Turnaround Atlas Awards annually. The awards honor leaders, professionals, top deals and firms from the distressed, special situations M&A, and the turnaround communities for significant deals and assignments completed.

Read more

The Company: Jillian Entertainment Holdings, Inc.
Jillian’s Entertainment Holdings, Inc. (Jillian’s) operated a variety of multi-venue restaurant/entertainment units (the “Restaurants”) similar in nature to Dave & Busters.

The Role:
To advise the Company on all aspects of the Chapter 11 case including the sale of the business pursuant to section 363 of the United States Bankruptcy Code.

The Outcome:
Despite years of negative same-store comps, Asgaard advisors were able to work with Jillian’s management and the outside CRO to position the Company for sale to two initial stalking horse bidders in a 363 sales process.

After contacting over 250 potential buyers in the secondary sales and auction, bids were obtained from multiple qualified bidders. Following an active auction involving the formation of multiple bidding teams, the Restaurants were sold to the original stalking horse bidders, but at an increase of approximately $25 million over the original stalking horse price, a premium of over 70%.

Read more

The Company: Velocity Express
Velocity Express Corporation (“Velocity”) (OTCPK: VEXP) was one of the largest providers of same-day delivery and distribution/logistics services in the United States.

The Role:
To represent Velocity Express and assist in restructuring the Senior Notes held by 15 different institutions so as to facilitate its pursuit of strategic alternatives, including raising $12 million of new financing to refinance its senior secured lender.

The Issue:
In mid-2008, in light of the dramatic economic slowdown impacting its business, Velocity found itself in danger of defaulting under its existing indenture agreement. In order to recover from such economic pressure and to pursue strategic alternatives, the Company sought to restructure approximately $90 million in senior secured notes (the “Senior Notes”).

The Outcome:
The advisors assisted the Company in obtaining the required unanimous approvals from holders of senior notes as well as the requisite approvals from various tranches of preferred shareholders to effect the restructuring.

In May 2008, the Company completed the restructuring of its Senior Notes to enhance its near-term liquidity and gain the flexibility required to procure replacement financing for its senior revolver facility. Specifically, the terms of the new Senior Notes provided for:

  1. interest payments to be paid-in-kind (PIK) through 2008, with partial PIK interest through 2009;
  2. waiver of the senior noteholders’ right of first refusal to replace the senior secured revolving credit facility; and
  3. the definition of terms under which replacement financing would be permitted.

The advisors also helped restructure several new loan facilities with Burdale Capital Finance, Inc., an indirect U.S. subsidiary of the Bank of Ireland, for a new $12 million senior secured revolving credit facility. The proceeds were used to pay Wells Fargo Foothill, the lender under Velocity’s existing credit facility, in full.

Read more

The Company: Nucentrix Broadband Networks, Inc.
Nucentrix Broadband Networks, Inc. (“Nucentrix”) held a significant number of MMDS licenses for C and D markets in order to deliver broadband services to Texas and other parts of the Southwest. The Company also had over 400 associated tower leases, most of which produced no operating revenues and hence functioned effectively as off balance sheet debt.

The Role:
To advise the Company on all aspects of the Chapter 11 case and represent them in the sale of the business pursuant to section 363 of the United States Bankruptcy Code, which included taking over a 20 month, failed sale process.

The Issue:
Prior to the filing, the Company had effectively discontinued its operations, materially reducing its staff and focused solely on preserving its exclusive rights to and value of the FCC and leased spectrum assets.

The Outcome:
The advisors ran a successful 363 sale process for the Company for which no buyer could be found in the preceding two years. Due to severe cash constraints, the auction process had to be concluded within 65 days of filing and the winning bidder had to agree to provide a DIP loan pre-closing to enable the Company to survive for the 6 months necessary to obtain required FCC approval to transfer the spectrum licenses.

Based on the stalking horse bid with SBC, projected returns to creditors were less than $0.12. Following a 40 plus hour auction, Nextel outbid SBC, paying over 320% of the stalking horse bid, which together with the sale of some residual assets, resulted in creditors being paid in full and equity holders receiving over $2.50 per share (shares had been trading at less than $0.05 on the petition date).