Finding Finance Strategies

Finding Finance Strategies PowerPoint PPT Presentation

Automotive News World Congress. January, 2006. 4. Financing Strategy ... Good News Visibility of auto sector troubles have brought availability of high ...

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Finding Finance Strategies

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Slide 1:Finding Finance Strategies – and Tactics – That Work

The creative avenues distressed companies are using to meet their financing needs in this market David L. Treadwell Chief Operating Officer EaglePicher Incorporated

Slide 2:EaglePicher Incorporated

Seven (7) Operating Divisions With Total Revenues of $662mm Divisions Include: Hillsdale Automotive $285mm Wolverine Automotive $105mm Filtration & Minerals $ 90mm Government Power $130mm Distributed Batteries $ 12mm Medical Batteries $ 3mm Pharma $ 11mm Boron $ 26mm

Slide 3:EaglePicher Incorporated

Filed for Chapter 11 Bankruptcy in April, 2005 Primary Reasons: Hillsdale division operating performance went from $40mm to $3mm over two year period Invested over $50mm in JV’s with $0 return Tech group operating performance significantly off – over three businesses.

Slide 4:Financing Strategy

First – Get credibility in the numbers Data is always bad Financial advisory firms Second – Plan to stop the bleeding, fix operations and execute Quick action with firm, consistent direction Involvement of customers Third –Develop a plan to return the business to health and execute

Slide 5:Financing Strategy

Throughout – Build credibility with employees, customers, vendors and financial participants Traditional lending sources not likely to be much help Good News – Visibility of auto sector troubles have brought availability of high risk debt to our market Bad News – Objectives are not always in line with creating long term value and “high risk” is “high yield” Find source that has incentives aligned with company

Slide 6:What’s Worked

EaglePicher Incorporated Situation: Financial numbers suspect, business process nonexistent, several divisions had significant operations problems, wide variances in capabilities. Solution: Accurate numbers, operations stabilized, implementing operational plan to return business to health. Bondholders funded $50mm third lien (PIK) debt and supported a first/second lien package of $295mm. Convertible to exit financing upon emergence. This replaced all existing financing. Result: EPI is financially solid pending emergence. We can commit to a solid growth plan with our employees and customers. All supported by the foundation of operational excellence.

Slide 7:What’s Worked

Oxford Automotive Situation: Weeks from running out of cash, needed months to complete $100mm transaction. Solution: Beneficiaries of potential transaction were the existing bondholders. They funded a $100mm loan, convertible to DIP financing upon filing. This allowed the company to complete the transaction and file an orderly, pre-packaged bankruptcy Result: No shipments missed. Oxford exited bankruptcy in four months, optimized value for impaired party.

Slide 8:Conclusion

Plenty of funding available – for a price Make sure you understand the entire price – are they going to support the plan or just looking to the assets? Keep your priorities in order. Get a quick handle on the actual situation Delay will kill you – be realistic, ask for help Financial numbers are always suspect Focus on fixing operations Build credibility Look to the sources with a vested interest in your success

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