By: High Gear Media Staff on May 4, 2007
Original Article: HIGHGEARMEDIA.COM
The company that invented the modern sunroof has filed for Chapter 11 bankruptcy protection, but company officials argue that the roof is half open, rather than half closed, what with ASC Inc. ready to be sold to the same private investment company that owns the high-performance specialty car manufacturer, Saleen.
ASC, based in the Detroit suburb of Southgate , has petitioned the courts to let it shed sizable assets and restructure debt incurred during its own, abortive push into the production of specialty vehicles. That included the Chevrolet SSR, a high-performance pickup truck ASC produced for several years on behalf of the General Motors division.
Barring a last-minute hitch, ASC expects to emerge from bankruptcy by mid-summer, with its remaining assets being sold to Hancock Park Associates, a private equity investment firm founded in 1986, which now owns Saleen, Inc., of Irvine, Calif.
“It’s terribly frustrating,” ASC President Paul Wilbur said of the bankruptcy, but referring to the impending sale, he told TheCarConnection.com that, “I think there’s a rosier future for this company.”
There’s little doubt that times have been rough for the Detroit supplier, formerly known as American Sunroof Corp. since the death of its founder, Heinz Prechter, in 2001. His widow, Waltraud, sold the firm to Questor Management Co., which shifted focus from sunroofs to low-volume vehicles, like SSR, a decision that also prompted the name change, which is short for American Specialty Cars.
Initially, things looked solid. The move away from sunroofs was no surprise, as they’d become little more than a commodity product, not the premium business Prechter envisioned when the German immigrant started out in Los Angeles , working from a two-car garage.
Detroit makers, as well as their import competitors, had been seeking ways to connect with consumers, and with the U.S. new car market increasingly fragmented, there seemed a tremendous opportunity to produce low-volume, high-margin specialty vehicles, such as the SSR and the Dodge Viper, a sports car for which ASC provided key pieces.
But the specialty niche hasn’t taken off as well as expected, and after an initial surge in sales off the SSR – which Wilbur says “took off hotter than anyone could have expected” – demand cooled quickly, Chevy pulling the plug on production. Compounding the crisis, the Viper’s big V-10 failed to meet government certification, forcing what has so far been a nine-month delay of the sports car.
With lots of ideas but no other immediate projects to replace the SSR and Viper, ASC lost roughly three-quarters of its business. Seeking a way out of the crisis, Wilbur and his senior management team, which includes former Ford Motor Co. product development chief Chris Theodore, began exploring a sale with a number of potential partners.
That included Hancock Park which, said Wilbur, pressed for a bankruptcy before completing a deal. That’s not entirely unusual, these days, added the Michigan executive. “Bankruptcy is becoming a financial strategy when you buy companies. You’re looking at the assets that create customer value and get rid of the assets that don’t make sense.”
In the case of ASC, that means cleaning up a balance sheet showing $31.2 million of total assets and $50.8 million of total liabilities.
ASC has already closed four manufacturing plants, in Livonia, Lansing and Gibraltar, Michigan, as well as in Bowling Green, Ky. , and three more engineering centers, eliminating 1000 jobs in the process. A technical center in Lansing will now be closed, as well.
According to Wilbur, “about 90 percent” of the remaining ASC workforce, approximately 250 employees, will remain on the job if the deal with Hancock Park wins final approval of the bankruptcy judge. Notably, that includes current ASC executives such as Wilbur and Theodore.
Under the law, ASC must still go through a formal auction process, likely to happen in the next 60 days or so. A new bidder could still enter the process, but in legal parlance, it would need to come up with a “better and higher bid.” Not only would it have to come up with more money, but also with a deal that would prove better, in the long run, for ASC, its debtors and employees.
Exactly what will come of the proposed partnership between ASC and Hancock’s Saleen division isn’t clear. The California-based firm produces the S7 supercar, as well as a high-performance version of such mainstream products as the Ford GT. Wilbur suggested there are plans in development which could result in several projects, possibly including both future niche vehicles and aftermarket performance products.
Asked for specifics, he demurred, insisting, “it’s too early to disclose them.”
What’s significant, Wilbur insisted, is that ASC will survive – at least in a slimmed-down form, anyway, once it works its way through the Chapter 11 process.
[Source: High Gear Media]
