From the Brink of Receivership to a Full Recovery: An LED Manufacturer's Story

OVERVIEW

  • Revenue: $37,000,000
  • General Description: World-leading manufacturer of LED circuit boards and LED applications
  • Geographic Location: United States
  • Markets Served: Automotive

THE SITUATION

JACO was engaged as a financial advisor after the company had defaulted on its credit obligations with its senior secured lender, which was aggressively pursuing the installation of a receiver. The situation was triggered by the loss of a $7 million high-margin production contract, compounded by battery electric vehicle (BEV) program launch delays that resulted in stranded capital expenditures.

The company had postponed necessary fixed-cost reductions, leading to compounding liquidity pressure and a technical default under its credit facility. The three family shareholders, who were retirement age and facing significant health challenges, believed liquidation or a receivership was the most likely outcome and were preparing for a wind-down of the business.

THE SOLUTION

JACO Advisory Group conducted a comprehensive review of the company’s operations, commercial relationships, and financial position. This analysis demonstrated that the business was viable and possessed excess collateral that could be unlocked to support continued operations and an orderly sale process.

The JACO team developed and executed a collaborative, three-pronged turnaround and sale strategy with full stakeholder alignment. This included working closely with the senior secured lender to unlock excess collateral, partnering with key customers to secure lump-sum payments related to previously amortized agreements, and coordinating with shareholders to secure a capital injection to bridge the company to a sale. JACO further aligned key trade vendors and customers to stabilize operations and maintain business continuity during the process.

THE OUTCOME

Through disciplined execution and broad stakeholder cooperation, JACO enabled the company to maintain operations and complete a successful expedited sale to a strategic buyer. The transaction delivered a full recovery of $14.23 million to the senior secured lender, generated an unexpected seven-figure distribution to shareholders, and preserved the business as a going concern, saving 180 jobs.

Don’t Let a Lender Default Define Your Company’s Future

If your business is under lender pressure or facing a potential receivership, there may be more options than you think. Contact JACO Advisory Group today to explore what’s possible with our experienced advisors.