Blackhawk Automotive Plastics Inc.'s direction to exit Chapter 11 bankruptcy should be clear in the next few months - a financial restructuring or a sale of the company, Chief Executive Officer Cliff Croley said.
On Dec. 11, U.S. Bankruptcy Judge Kay Woods in Youngstown, Ohio, approved both Blackhawk's debtor-in-possession financing and the company's procedures to find a buyer that will keep Blackhawk intact as a going concern.
Things should move quickly during the next several months. ``We expect to either have our restructuring or have a sale of the company by the end of ... March. That's our target,'' Croley said.
Financial documents have started going out to prospective buyers in a process coordinated by Detroit investment banker W.Y. Campbell & Co. About 100 companies have contacted Blackhawk, although not all will get the document package, Croley said.
Blackhawk expects to end 2007 with $170 million in sales, from its automotive molding and assembly of parts such as louvered air vents, in-mold appliques and instrument panels. Croley said the company is profitable.
He explained the two-track process during an interview at Blackhawk headquarters in Salem. The automotive supplier runs a second molding plant, in Mason, Ohio. Total employment is 1,574.
``Our strategy is very, very simple,'' Croley said. ``We have a very strong company, a very strong book of business. We've gotten our financing squared away. Our debtor-in-possession financing has now been approved. We are going down a parallel process.
``We are going to look at financing alternatives on our own. We also will look at alternatives to sell the company. ... Whatever yields the best value for our constituents is the direction that we will go.''
The judge will have the final OK.
Blackhawk is busy, Croley said, adding that the company has picked up work while in Chapter 11.
How easy will it be to refinance now, when credit is tight in the wake of the subprime mortgage mess? Croley said Blackhawk ran into that issue last summer. But since the Chapter 11 filing, several financial institutions have approached Blackhawk officials with potential loan packages.
``I think what's happening is the credit markets have hit the higher-end, larger loans harder, and the amount of loans we're talking about would be in the $35 [million] to $40 million range. That's more middle-market, really,'' he said.
According to court filings, in July and August Blackhawk's banking group - along with Key Equity Capital Corp. and two major customers, General Motors Corp. and International Automotive Components Group North America LLC - hammered out an agreement covering improved borrowing terms. The agreement also included restrictions on GM and IAC - the former interiors group of Lear Corp., created by financier Wilbur Ross - from moving work out of Blackhawk.
In effect, the two automotive customers are financing Blackhawk right now. That type of agreement is a key to a solid future for a company seeking a quick exit out of bankruptcy.
``It's important, whenever you're going through something like that this, that all constituents maintain a stable environment,'' Croley said. ``If the environment gets unstable, it's like the OK Corral. If somebody starts to make a move, things get unstable. And that's now helpful to us in creating the most value.''