The situation: Global logistics provider weighed down by unsustainable debt
Syncreon is a leading provider of global logistics services to technology and automotive manufacturers. The company is headquartered in Michigan, USA, with a Dutch holding company and 14,000+ employees across 100+ facilities, 20 countries and six continents.
Despite revenue growth, syncreon faced significant struggles relating to approximately $1.1 billion of debt, consisting of an asset-based lending (ABL) facility, liquidity loan facilities, senior secured credit facility, and unsecured notes. In addition to a highly levered capital structure, syncreon also had a significantly unprofitable contract with one of the world’s largest technology companies. This commercial failure significantly restrained liquidity and made servicing its debt impossible.
The situation was complicated by the cross-border nature of the organization, comprising more than 60 separate entities—half of which were obligors for the company’s funded debt—operating under 20 different jurisdictions. This included having to manage any solvency-related jurisdiction concerns. Alongside a rigid ABL facility, it frequently struggled to meet vendor obligations due to frictions in the process of moving cash around the globe.
This picture, compounded by the prospect of debts maturing from 2020, prompted syncreon to market the potential sale of the business—a process which concluded with no buyer.
AlixPartners was appointed as financial advisor to assist syncreon through a restructuring process, with responsibilities for cash management, evaluating the business plan, vendor management, communication strategies and contingency planning.
The approach: Negotiating a first-of-its-kind, cross-border financial restructure
Setting syncreon on a robust new financial track required the coordination of various moving parts, from leverage, liquidity and the expectations of stakeholders, to the international nature of the business. In order to deliver a successful and timely transaction, global jurisdictional expertise was needed.
After months of hard-fought negotiations, the global transaction team—led by AlixPartners, PJT Partners and Weil, alongside syncreon senior management—completed a landmark, cross-jurisdictional restructuring of syncreon’s Dutch and English subsidiaries. This was made possible by amending the governing law of the company’s senior secured credit facility, and unsecured notes, to English law, paired with Chapter 15 recognition proceedings under the US Bankruptcy Code, and the Companies’ Creditor Arrangement Act (CCAA).
AlixPartners’ US and UK Turnaround and Restructuring teams worked closely with syncreon’s senior management and other debtor advisors to help complete this landmark global restructuring, becoming the first company to ever use an English scheme to restructure debt issued by a US-based group. In so doing, it has given global companies a blueprint for navigating English courts in order to avoid protracted US-style cross-border proceedings.
The solution: A better funded debt and ABL arrangement
AlixPartners was there when it really mattered to help syncreon eliminate commercial concerns around its business, safeguard more than 14,000 jobs, and provide an invaluable multi-million-dollar injection of liquidity.
By materially reconfiguring syncreon’s capital structure, its funded debt has been reduced by approximately $690 million. Meanwhile, its annual debt service has been reduced by $51 million, and a new ABL facility established that better suits syncreon’s commercial and operational footprint.
In addition, the raising of an incremental $125.5 million in liquidity from an ad hoc group of lenders ensured syncreon’s ongoing operations were secured.
