The leadership at Empire Die Casting Co. of Macedonia has filed for Chapter 11 bankruptcy protection and hopes to sell the company soon. New Growth Capital Group LLC of Hudson has submitted a letter of intent to acquire the assets of Empire Die Casting for $11.7 million in cash. New Growth Capital Group would be designated as a stalking horse bidder for the auction, and Empire Die Casting would pay a break-up fee of $180,000 if New Growth Capital Group is out-bid.
Carl Harbert, managing partner of New Growth Capital, said the small group of operators is looking to buy companies in which they can remain invested for 30-plus years. Empire Die Casting would be New Growth Capital’s first acquisition.
Robert Hopkins, president of Empire Die Casting, declined to disclose potential buyers of the business, but did say the interested parties plan to keep the aluminum and zinc casting company in Macedonia and to grow it.
Mr. Hopkins said the desire to sell the company has come up in the last two months. He said the company’s owner is looking to retire and get out of the business.
The bankruptcy was filed Oct. 16 in U.S. Bankruptcy Court in Akron. The company listed assets of between $10,000,001 and $50 million, and liabilities of between $1,000,001 and $10 million. There are about 200 employees at the company’s plant at 635 E. Highland Road.
The bid deadline listed in the bid procedures order is 5 p.m. Dec. 16. Marc Merklin, a managing partner in the Akron office of law firm Brouse McDowell LPA, said the court will hear the request for the bid procedures on Nov. 5. Until then, the terms in the referenced documents are not final.
The main hurdle Empire Die Casting faces is a potential liability in its multiemployer pension plan, which it’s addressing through the Chapter 11 bankruptcy filing. New Growth Capital’s letter of intent specifies that its proposed purchase would exclude rights, interests and liabilities regarding employee collective bargaining agreements and employee retirement/pension/benefit plans, among other corporate governance materials.
Mr. Merklin said the pension plan has a multimillion-dollar liability and is “unworkable” as is. He said with a multiemployer plan, when one employer withdraws from the plan, it puts pressure on the others. That means penalties for such plans are high.
According to a document included in the Chapter 11 filing, Empire Die Casting had $34 million in sales last fiscal year. The document notes that profitability and cash flow for the company have decreased in recent years due to “production inefficiencies.” The company also saw an increase in indirect costs and “ineffective implementation of a new enterprise resource planning (ERP) system,” which made it difficult for Empire Die Casting to manage its costs and pricing.
(citation http://www.crainscleveland.com/article/20131024/FREE/131029883)
See the Kinetic Die Casting Company Blog prior post:
Empire Die Casting Company Bankruptcy Filing
(citation http://www.amm.com/Article/3268180/Empire-Die-Casting-files-for-bankruptcy.html)
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