Case Study:

Acme Petroleum & Fuel Co., Inc. - Corporate Recovery/Exclusive Sale

Situation

• Matrix was engaged to provide restructuring services to Acme Petroleum and Fuel Company, Inc. and Acme Properties LP.  At the time of engagement Acme had less than a month to file for bankruptcy due to their cash burn rate.
• After quickly assessing the company’s situation, Matrix immediately negotiated a Debtor-in-Possession (DIP) facility in preparation for filing for Chapter 11 bankruptcy protection.  We then advised on the closure of a number of stores that were not financially viable in the short-term, reducing the total number of operating stores from 57 to 32 and drastically improving operating cash flow.  Further, Matrix was able to help management reduce corporate SG&A by over $15,000 per store.

Objective

• With the DIP in place, unprofitable stores closed, corporate expenses reduced and operating under Chapter 11 protection, Matrix was able to focus on customizing a sale process that would maximize the value of the sites for the estates.

Solution

• Matrix solicited a bid from a strategic buyer that became the Stalking Horse Bid (SHB) in a Section 363 Liquidation Sale.
• After Bankruptcy Court approved the SHB contract, we marketed the assets of the company to over 275 strategic and financial buyers and invited them to participate in a live auction format that allowed prospective bidders to bid on individual stores, sets of stores or on the entire chain.
• Matrix organized and distributed evaluation materials to all the prospective buyers prior to the auction date and orchestrated a live auction process that included 32 qualified bidders.
• By fostering momentum in the sale process and generating a substantial amount of competition at the live auction, our process delivered a value of $33 million for the assets, which was 70% higher than the SHB and over 7.0x aggregate store level EBITDA.
• Matrix’s decision to allow bidders to make offers on individual stores resulted in a recovery to the estates of $7 million more than the highest bidder on the entire chain of stores.  Further, the DIP lender was fully paid and the other secured lenders minimized their write-offs.