A group led by the former chief executive of Trend Technologies Inc. has agreed to purchase virtually all of the company's operating assets for about $70 million. Trend voluntarily filed bankruptcy petitions Nov. 7 to facilitate the sale.
Earl Payton, who heads the buyout group, resigned after nine months as CEO and was named Trend's chief operating officer. Trend had acquired his company, Cowden Metal Specialties Inc. of Chino, Calif., in late 2000.
The petitions under Chapter 11 of the U.S. Bankruptcy Code covered Trend Technologies, holding company Trend Holdings Inc. and wholly owned direct and indirect domestic subsidiaries. Plants operate in Chino, San Jose and Hayward, Calif.; Round Rock, Texas; Elk Grove Village, Ill.; and Longmont, Colo.
Moody's Investors Service immediately lowered Trend's ratings and initiated a review for a further downgrade.
The Nov. 8 action lowered Trend to a ``very highly speculative'' Caa2 from B2, said Howard Sitzer, vice president and senior analyst with the corporate finance group of Moody's in New York.
In March 2000, Doughty Hanson & Co. Ltd. invested $215 million in Trend equity and committed at least another $100 million through a loan from Deutsche Bank Trust Co. Americas. The bankruptcy filing in Wilmington, Del., listed the bank as the biggest creditor, with $206 million in term and revolving loans.
Having Payton buy the assets could save Trend. Otherwise, Sitzer suggested, the asset value could dissipate.
``They could have a shot at [buying the assets for] $70 million vs. what it might require to pursue in the bankruptcy court,'' he said. ``We knew they were having difficulty.''
The bankruptcy filing excludes foreign subsidiaries and those operations should not be impacted, Trend said in a statement.
Trend is using the post-bankruptcy restructuring services of Broadway Advisors LLC of Los Angeles. Broadway partner Thomas Paccioretti was appointed as Trend's chief restructuring officer.
Earlier, Crossroads LLC of Irvine, Calif., provided advisory business services for several months.
Trend has retained the Los Angeles office of Sitrick & Co. Inc., a corporate, financial, transactional and crisis communications company with strong access to media outlets.
The company started making injection molds in San Jose in 1973 and added injection molding in 1980. Trend, now based in Chino, had 2001 sales of $523.9 million.