News

PPM Technologies Seeks Leading Bidder For June 17 Auction


By Jacqueline Palank

DBR Small Cap

PPM Technologies Inc., which provides manufacturing equipment to the food processing and packaging industry, is gearing up to put its business on the auction block.

The Chicago company faces a May 24 deadline to secure a stalking-horse bid to lead off the bidding for substantially all of its assets at a bankruptcy court-approved auction on June 17, or else risk defaulting on its bankruptcy loan.

That fast-approaching deadline has PPM's investment banker, Traxi LLC, working "night and day" to reach out to as many buyers as possible, according to Thomas J. Devitt.

Devitt, a Traxi managing director, said both strategic and financial buyers, like private-equity firms, have expressed interest in acquiring the company.

"There are certainly certain financial and strategic parties that have an intimate knowledge of the company," Devitt said. "There could be multiple parties that could act as a stalking horse, and potentially there could be a credit bid from the existing lender."

Devitt was referring to the right of PPM's prebankruptcy lenders, a group including Calliope Capital Corp. and funds affiliated with Valens Capital Management LLC, to forgive the more than $19 million they're owed on existing loans in exchange for the assets. The company's bankruptcy lender, one of the Valens funds, would also have the right to bid the debt that it's owed.

The specific assets up for grabs include the lease to PPM's Newberg, Ore., manufacturing facility, all of its manufacturing equipment and customer lists. That's particularly valuable, Devitt said, because not only does the company sell new equipment, but it also generates significant revenue by selling replacement parts and providing services to its existing customers.

PPM, which specializes in providing such machinery as conveyors and fryers for the snack food industry, filed for Chapter 11 protection in Chicago on April 3. The company reported assets of $1 million to $10 million and debts of $10 million to $50 million.

PPM's bankruptcy filing followed a lawsuit that its prebankruptcy lenders brought against the company and former chief executive in New York state court. In the suit, the lenders accused the chief executive of making a series of misrepresentations to the lenders regarding PPM's financial health and ability to meet its obligations.

Since the bankruptcy filing, the lenders have agreed to dismiss the lawsuit in the event the lenders recover at least $15 million of what they're owed.

Paul Fried is a managing director at Traxi LLC, a national full-service investment banking and advisory firm providing comprehensive solutions to complex business challenges and capital needs. Friedís experience spans investment banking, distressed-asset acquisitions, workouts and recovery, securitization, high-yield structured finance, equity joint ventures, and fundraising. In his 25-year career, he has handled more than $10 billion in distressed assets, loans and securities. Reach him at (212) 812-9447 or pfried@traxi.com. Visit www.traxi.com.