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November 11, 2021 – Further to the Court’s September 30th bidding procedures order [Docket No. 122] and an auction held on November 10, 2021, the Debtor notified the Court that VV9000 LLC (the "Buyer") has been selected as the successful bidder for substantially all of its assets [Docket No. 263].
The Debtor's assets are principally comprised of a single location at 9000 River Road, Delair, NJ consisting of approximately 500,000 square feet of industrial space, including a cast house, foundry and processing area.
An asset purchase agreement in respect of the Buyer's $32.0mn bid has not yet been filed with the Debtor looking to have the sale approved at a November 12th hearing. Although clearly several qualified bidders, the Debtor has not named a back-up bidder or commented on how the auction unfolded. There is no publicly available information as to a VV9000 LLC although the name (9000 is the Debtor's address) and lack of publicly available information would suggest a recently formed (or to be formed) acquisition vehicle.
On October 1st, the Debtor filed a notice naming CGPN, LLC as a stalking horse bidder in a proposed sale of its assets [Docket No. 127]; with the Debtor then (and since) declining to provide further background as to the stalking horse, a Delaware LLC formed on September 30th (CGPN APA was available only upon request).
On October 4th, the Debtor asked the Court to approve bidder protections for the stalking horse bidder; and on October 8th, the Court issued an order approving the Debtor’s amended motion to approve the requested bidder protections (a 2% break-up fee and up to $75k expense reimbursement).
On September 30th, the Court hearing the Aluminum Shapes case issued an order approving (i) bidding procedures for the sale of substantially all of the Debtor’s assets, (ii) a form of asset purchase agreement and (iii) a timetable culminating in an auction on October 25th and a sale hearing on October 28th [Docket No. 122]. Those dates were subsequently extended.
Still not clarified is the role, if any, of Reich Brothers, LLC (“Reich Bros.”) which (as discussed below) was named as a presumptive stalking horse on the Debtor’s Petition date. The Debtor has disclosed that Reich Bros. has a position in the DIP financing being provided by Tiger Finance, LLC (“Tiger,” $15.5mn including $9.3mn roll-up), with Tiger considered a qualified bidder in the asset sale process without taking further action.
The Debtor’s bidding procedures motion [Docket No. 94] attached a “form” of asset purchase agreement to be completed by aspiring qualified bidders with that form noting a suggested purchase price of $28.0mn plus assumed liabilities. The form of APA would also require a 3% deposit of the $28.0mn although the bidding procedures separately notes a 7.5% good faith deposit from all qualified bidders. That price roughly equates to what is owed to DIP lender Tiger Finance, LLC ($15.5mn including $9.3mn roll-up) and unsecured creditors ($13.0mn, including a PPP Loan and union pension/health/benefit obligations), but its presence in the form APA without any further context adds to a general sense of oddness about this filing and the sale process. The possibility that it was just a drafting mistake seems to have been eliminated in that the bidding procedures order specifically references the form APA included in the September 15th motion.
At filing, the Debtor noted that it had “received a proposed Stalking Horse offer from Reich Brothers, LLC (‘Reich Bros.’), which will be further disclosed in connection with the Debtor’s contemplated Sale Motion.” The Debtors also specifically referred to Reich Bros as “the proposed Stalking Horse under the Sale Motion.” There is in fact no further discussion of Reich Bros’ potential stalking horse role in the present (sales) motion; although the motion does reference “contingent bids” with the Debtors asking for Court authority to reimburse one contingent bidder (but not a stalking horse) for up to $75k in expenses. Presumably Reich Bros. with that $28.0mn possibly their intended opener. Regardless, the Debtors were looking to move quickly, with bids due by October 11th and a sale hearing requested for October 19th.
The motion continues: “On or about June 18, 2021, the Debtor engaged Cowen and Company, LLC (‘Cowen’) to provide investment banking services with respect to the Debtor’s Business and Assets, including exploring all restructuring, financing and M&A alternatives with respect thereto.
The Debtor instructed Cowen to find a purchaser who could continue the Debtor’s Business as a going concern. Upon its retention, Cowen immediately began conducting due diligence on the Business and Assets. In the period prior to the Petition Date, Cowen began significant outreach efforts and cast a wide net, on the Debtor’s behalf, in soliciting interest from potential purchasers of the Business or Assets.
Cowen contacted in excess of 160 potential buyers with more than 60 executing non-disclosure agreements (‘NDAs’), and performed significant diligence on Business and Assets. The Debtor conducted numerous meetings with potential buyers. The Debtor has received indications of interest from multiple potential buyers and numerous other potential buyers are actively reviewing the Business and Assets as of the date of this Motion. Cowen continues to actively market the Business and Assets, to a wide spectrum of interested parties, including potential financial and strategic buyers.
The Debtor and Cowen are and will continue their marketing process post-petition, which will afford the Debtor the best opportunity to maximize value for the sale of the Business or Assets at auction (the ‘Auction’).
Subject to the Bidding Procedures, and in consultation with its post-petition lender, Tiger Finance, LLC (the ‘DIP Lender’), its Advisors, and the official committee of unsecured creditors (the ‘Committee’; and together with the DIP Lender the ‘Consultation Parties’), the Debtor and its Advisors retain the right to pursue any transaction or restructuring strategy that, in the Debtor’s business judgment, will maximize the value of its estate. If the Debtor receives multiple offers for the Business or the Assets, the Debtor intends to conduct the Auction to determine the highest or best offer for the Business or Assets.”
Reich Bros. as Stalking Horse?
At filing, the Meyers Declaration provided: “The Debtor worked with Cowen, as investment banker, to conduct a marketing process. Cowen and the Debtor prepared a list of more than 140 potential investors (including various financial sponsors and strategic purchasers) that were considered likely participants in a sale process.
Following the initial outreach to the identified parties, information was provided to these parties to gauge their interest prior to executing a non-disclosure agreement (‘NDA’). Approximately 40 parties executed NDAs, who were then granted access to a data room.
The Debtor’s advisors at Cowen have received a proposed Stalking Horse offer from Reich Brothers, LLC (‘Reich Bros.’), which will be further disclosed in connection with the Debtor’s contemplated Sale Motion. The Stalking Horse offer from Reich Bros. was facilitated by the Debtor’s Prepetition Lender, TigerFN.”
FNA participant in the Prepetition Financing Documents…and the DIP Facility is Align Business Finance LLC (f/k/a Reich Bros Business Solutions LLC) is 100% owned by ABF Intermediate Holdings LLC which is then 100% owned by ABF Ultimate Holdings LLC. ABF Ultimate Holdings LLC is 50% owned by Jonathan and Adam Reich, who own [ %] of Reich Brothers, the proposed Stalking Horse under the Sale Motion.
Reich Bros. describes itself as: “Reich Brothers is a national industrial real estate firm with a specialization in the acquisition, repurposing, and management of manufacturing and distribution facilities across the United States. With several synergistic divisions across multiple disciplines, Reich Brothers provides a one stop shop solution for large corporates, financial institutions, and owner-operators globally.”
About the Debtors
According to the Debtors: “At Aluminum Shapes, we start the production process by melting scrap and primary ingot to cast billets from seven to sixteen inches in diameter. The billets are then extruded in small, medium, and large presses. At this point, many extruders see their job as done while our value is just beginning.
Shapes punches holes, precision cuts, forms and even welds using over 200 pieces of fabrication equipment. For high volume jobs we use custom machines for optimal efficiency.
All of these services under one roof. One supply chain and one company responsible for all phases of quality and service. For large OEM customers, Shapes employs highly experienced VA VE engineers adept at working with your managers and engineers on cost down projects – die redesign, scrap reduction, handling solutions, and outsource fabrication.
With six (6) high tonnage presses – more than any other North American manufacturer – Shapes can produce and ship over 600 metric tons of extruded aluminum annually in a wide range of press diameters and alloys. Additionally, Shapes has the capacity to cast more than 182 metric tons of aluminum log annually in a wide range of sizes and alloys.
The Meyers Declaration adds: “The Debtor is an aluminum processor (the ‘Business’). The Debtor was founded by Ben Corson in 1948 and began operations as a supplier of extruded aluminum for his aluminum windows and doors. The Debtor has since grown to become a predominant fabricator of aluminum east of the Mississippi, and one of only a few processors in the country capable of, and in possession of, a completely vertically integrated plant and operations for the processing, annealing, cutting, fabricating, welding, and extruding of aluminum. The Debtor became incorporated in 1956 and subsequently acquired fifty-five (55) acres of land at its current location in Delair, New Jersey upon which it developed and built its aluminum processing facilities. As the United States economy blossomed in the 1960s, the Debtor began extruding aluminum for the trucking and trailer industry. At that time, the Debtor underwent a significant capital investment program by commissioning four new state-of-the-art extrusion presses. These acquisitions greatly increased capacity. Later, the Debtor would construct a “cast house” foundry for processing aluminum into billets, substantially reducing its raw material costs. In 1995, the Debtor underwent a further capital program, acquiring the Danieli Press, which was, at the time, the most sophisticated press in the industry. The addition of the Danieli Press increased aluminum processing capacity to nearly 30 million pounds annually. The Debtor’s substantial machinery, fixtures, and equipment, including a valuable cast house and foundry furnace, several presses, and processing equipment (the ‘FFE’), are state of the art.
The Debtor is internationally known for some of its projects, including its fabrication and provision of the scaffolding for the reconstruction of the Statue of Liberty, for which it received recognition by the Guinness Book of World Records for what was then the largest free-standing aluminum structure. In 1998, it provided scaffolding for the Washington monument rehabilitation. Some seventy years after its founding, the Debtor has become and continues to be an industry leader in the fabrication, processing, and extruding of aluminum metals.
The Debtor owns and operates a single location at 9000 River Road, Delair, NJ, consisting of approximately 500,000 square feet of industrial space, including a cast house, foundry, and processing area (the “Real Property”). Located on the Real Property are buildings and the Debtor’s FFE. (FFE together with the Real Property, the “Assets”). At present, the Debtor is not operating the cast house.
The Debtor is a privately held New Jersey limited liability company. Jacky Cheung, an Austrailian national and resident of Vietnam, owns 100% of the membership interests and is the sole member of the Debtor. The Debtor’s current managers (‘Managers’) are Jacky Cheung, Charles Pok, and Solomon Rosenthal (CEO), who runs the day-to-day operations for the Debtor.”
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