MSD initiates voluntary Chapter 11

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MSD PERFORMANCE INITIATES VOLUNTARY CHAPTER 11 PROCESS TO COMPLETE AN ORDERLY SALE
Lenders' Consent To Company's Use Of Cash Collateral Ensures Operations Continue As Usual With the Highest Quality and Outstanding Service

EL Paso, Texas, September 6, 2013 – MSD Performance, Inc. today announced that to address liquidity needs and facilitate a restructuring, the company and its U.S. subsidiaries have filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware under Chapter 11 of the U.S. Bankruptcy Code. The filing does not include the company's non-U.S. entities.
MSDP has determined that the best way to preserve value for its stakeholders is through an orderly sale of substantially all of its assets. To ensure the most efficient sales process possible and to optimize the potential results for all parties, the Company has decided to execute this sale process under the protection of the U.S. Bankruptcy Code.
Through the Chapter 11 filing, MSDP seeks to preserve continuity, to the greatest extent possible, for its customers, employees and business partners while it continues discussions with potential buyers to secure the highest and best outcome for its businesses.
"As an industry leader in the performance ignition systems market for over 40 years, MSDP brings significant value to customers, suppliers and potential buyers based on our long-standing customer relationships, robust product offering and proven focus on quality performance," said Ron Turcotte, Chairman and CEO. "Selling operations on a going concern basis in an orderly sale through Chapter 11 is the best way to preserve as many jobs as possible, best serve our customers and will allow our operations to emerge from bankruptcy in a relatively short time frame," said Turcotte. "The operations we are selling have strong product portfolios, advanced technologies and continue to perform well operationally."
Under the bankruptcy sale process, the proposed transaction is subject to the execution of a definitive asset purchase agreement, court approval and other customary conditions. Interested parties will have an opportunity to submit higher or better offers for MSDP's assets.
The Company restructured its debt in 2009 following the financial downturn as well as a series of acquisitions by prior management, which burdened it with excessive debt. Since that time, the Company has reduced operating costs, introduced award-winning products and accelerated marketing initiatives. The decision to file under Chapter 11 is necessary to facilitate this transaction, which positions MSDP to take advantage of emerging growth opportunities.
To fund its continuing operations MSDP has received the consent of the lenders under its existing secured credit facility to use the Company's cash collateral. Subject to Court approval, the Company's cash collateral will be used for the company's normal working capital requirements. Employees will continue to be paid as usual, including their healthcare and other benefits and no layoffs or facility closings are anticipated. Customers will receive their orders as usual and the Company anticipates that there will be no changes in warranties or other customer programs Additionally, suppliers will be paid for goods and services after the filing date in accordance with existing terms and contracts.
MSDP's restructuring counsel is Jones Day. Its investment banker is SSG Advisors, LLC. MSDP is also represented by Richards Layton and Finger, as local counsel.
About MSD Performance, Inc.
MSD Performance, Inc., headquartered in El Paso, Texas, operates in the power sports enthusiast and professional racer markets where they maintain leading market share positions across all of their product categories under the MSD Ignition®, Racepak® and Powerteq® brands. You can shop our products online at www.msdignition.com, www.powerteq.com and www.racepak.com, or visit one of our many automotive and performance distributors across the country.
Contacts:
For Media: For Investment Community:
Manny Grijalva J. Scott Victor
MSD Performance SSG Advisors, LLC
(915) 856-2416 (610) 940-5802





http://www.msdignition.com/default.aspx?id=17393&blogid=429

Wow,

My guess is too many people feeding off the revenue stream and the stream couldn't keep up. ??? Not uncommon.

I guess you beat me to it

This sucks. I love my MSD ignition boxes, so much that I even paid MSD to fix one that I broke due to my own abuse (sprayed the engine bay with water, wiped the box when it shorted)

it'll be interesting to see what the future holds...MSD is such a recognized name in ignition components, will they simply go away or will someone buy them and continue to make them? or will they be bought and their products sold under a new name?

Someone bought out Barry Grant and that was one terrible company with ZERO customer service. HOPEFULLY someone will step up and keep MSD up and running. If a company like that is having trouble I hate to see how others are doing.

Debt is the root of evil for corporations and individuals. How many companies would go bankrupt if they didn't have debt? Same for individuals?

MSD is not the same company it was since it was sold to a conglomerate about 10 years ago. When it was sold, prices almost doubled overnight (at least some items, others just went up alot!) - remember that? Why was that - because the new owners wanted return on investment and they bought the company with debt.

Some companies survive this cycle and some don't.

This MSD situation looks like something that Don Schumacher could fix and make better. His industry experience is electrical/automotive hardware and he is very good at that.

The news release mentions MSD acquired other companies, accumulating debt in the process I assume, if those other companies were non performers or risky or not a good fit, who were they?
I always thought MSD was a solid company with a good product and innovation. The Chinese angle was their biggest hurdle IMO, but that everyone has seen coming, and re pricing was their best defense if possible or Chapter 11. I didn't see any aggressive repricing and once Summit jumped on the MSD Copy China bandwagon, it looked to me to be a rough ride.
Did anybody see this coming?
So what other companies are on the ledge unknown to us in this industry?

i just bought my msd pro billet dist for my 470 bb from mancini at the mopar nats. my gts already has 6al box so i really hope they bounce back. guess i bess get my coil and wires pronto.

If I read this right

They will stay in business, just reorganizing debt

They ought Racepak a few years back.

Racepak is the most expensive data acquisition I know of. I have one and it seems to have a very hard to follow software application also. I am forced to use a lot of software in the railroad industry. Some of it is extremely simple, so much you think you are not doing it right. Then some is actually worse than racepak. Just seems some companies say screw the customer this is how we choose to do things. MSD 7531 is fairly simple in some respects then in others forces you to take steps that should have been removed. I wonder when companies are going to realize ease of using their software sells product.

I use MSD and Racepak and hope they can pull this back together.

Leon