Avborne

Avborne is one of North America’s largest independent aviation service companies providing maintenance, repair and overhaul services to US and international passenger and cargo airlines.  Avborne, Inc. originally consisted of two divisions: Avborne Accessory Group (components and parts repair, inventory management) and Avborne Heavy Maintenance (airframe heavy checks, MRO, conversions, installations, interior modifications).  Major customers included Airborne Express, ASTAR, FedEx, AirTran  and US Airways.

Opportunities and Challenges:

  • Profitability declined from $20.0 million of EBITDA to $5.0 million of EBITDA
  • Highly leveraged balance sheet
  • Negative cash flow
  • $123 million of debt in default
  • Customer base had its own financial distress
  • Extremely low employee morale

Solutions and Results:

  • Negotiated a significant restructuring of the senior and subordinated debt, buying $100 million of senior debt for $30.0 million and converting $25 million of sub-debt into equity
  • Reduced corporate overhead burden from parent to subsidiary
  • De-centralized senior management
  • Provided subsidiary with necessary resources and cash flow to rebuild the business
  • Created separate manpower training and outsourcing pool for the industry
  • Built consensus among ownership interests
  • Negotiated a new $25 million senior credit facility and $9.0 million sale leaseback facility, returning most of the capital invested in the restructuring
  • Improved trailing EBITDA from $3 million to $9 million in an 18-month period
  • As the accessories division was getting ready to be sold (a long-term objective), the multiples in this industry changed from the 4-6’s to the 7-9’s
  • Turned one-time projects into long-term service contracts
  • Employee morale was at all-time high
  • Customer satisfaction was highest level ever, leading to 5-year supply agreements
  • Returned 80% of capital invested at time of restructuring
  • 50% of the business (accessories) was sold to a large strategic buyer for a purchase price in excess of $90 million (11 times EBITDA), providing the investors with a 34% IRR
  • Company executed a $15 million dividend recap from the remaining business (heavy maintenance)
  • The heavy maintenance portion of the business was sold to AAR Corp.; the remaining at-risk capital ($16.75 million) was recovered – with an opportunity to receive an additional $8 million in excess distributions
Beretta

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