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Case Studies

EV Engineering and Manufacturing Company Sector

Industrial & Manufacturing Services

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SOLU­TION

  • Found­ed in the 1960s, Geico (the Com­pa­ny”) has become a world leader in design and devel­op­ment of cus­tomiz­able turnkey auto­mat­ed auto­mo­tive pro­duc­tion line solu­tions offer­ing flex­i­ble and cre­ative ser­vices for any project type
  • The Com­pa­ny was award­ed a $125 MM con­tract (the Project”) with a world renown auto­mo­tive man­u­fac­tur­er (“OEM”). The Com­pa­ny would serve as the gen­er­al con­trac­tor and has reduced its per­for­mance risk by sub-con­tract­ing the project to a For­tune 500 com­pa­ny as well as a lead­ing provider of assem­bly line appli­ca­tion technology
  • In order to begin the Project, the OEM request­ed a siz­able down pay­ment from the Com­pa­ny. How­ev­er, the OEM required a guar­an­tee of con­tract com­ple­tion pri­or to mak­ing the down payment
  • This posed a prob­lem for the Com­pa­ny as it was oper­at­ing with­in under a mora­to­ri­um due to over-lever­age (close to 10x) and razor-thin equi­ty val­ue and thus did not have its nor­mal bond­ing lines avail­able with its exist­ing bank-syn­di­cate (10+ banks)
  • Chi­ron Finan­cial was retained as the invest­ment bank to assist in obtain­ing an instru­ment and struc­ture that would sat­is­fy the Project guar­an­tee require­ments by the EPC Customer

OUT­COME

  • Chi­ron suc­cess­ful­ly arranged a $67.5 MM advance pay­ment sure­ty bond through a strate­gic part­ner which was to be used as the Project guar­an­tee; how­ev­er, the OEM was unfa­mil­iar with the sure­ty bond and instead required the more com­mer­cial, advance bank guar­an­tee – which was impos­si­ble for the Com­pa­ny to obtain due to the con­straints of its mora­to­ri­um agreement
  • Chi­ron mar­ket­ed the sure­ty bond as col­lat­er­al to secure the advance bank guar­an­tee to mul­ti­ple local banks, but all were unfa­mil­iar with the pro­posed struc­ture and declined the opportunity
  • As a result, Chi­ron mar­ket­ed the oppor­tu­ni­ty to many inter­na­tion­al cap­i­tal providers, received mul­ti­ple advance bank guar­an­tee term sheets struc­tured as a fronting guar­an­tee back­stopped by a sure­ty bond, suc­cess­ful­ly nego­ti­at­ed to obtain the best terms for the Com­pa­ny, and assist­ed with the dili­gence process
  • The OEM at this point incurred bud­get over­runs and con­se­quent­ly paused the project until 2025

The Challenge

The Company was awarded a $125 MM contract (the “Project”) with a world renown automotive manufacturer (“OEM”). The Company would serve as the general contractor and has reduced its performance risk by sub-contracting the project to a Fortune 500 company as well as a leading provider of assembly line application technology. •In order to begin the Project, the OEM requested a sizable down payment from the Company. However, the OEM required a guarantee of contract completion prior to making the down payment. This posed a problem for the Company as it was operating within under a moratorium due to over-leverage.

The Chiron Solution

Chiron Financial was retained as the investment bank to assist in obtaining an instrument and structure that would satisfy the Project guarantee requirements by the EPC Customer

The Result

Chiron marketed the opportunity to many international capital providers, received multiple advance bank guarantee term sheets structured as a fronting guarantee backstopped by a surety bond, successfully negotiated to obtain the best terms for the Company, and assisted with the diligence process

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