INVX DD Report
April 2, 2010:
As of Jan. 2, 2010, INVX was indebted at approx. 2541 billion Baht (unaudited) but has total assets of 1.245 billion Baht (unaudited)
Jan 6, 2010: Randy Acres announced as CEO (effective since Dec. 24, 2009)
The accounts receivable for Thailand Innovex was 2.881 billion Baht (more than enough to be solvent) meaning that the failing party was Innovex, Inc. the parent company. Innovex Thailand failed not because of financial or operating difficulties on their part, but because of a lack of payment by the parent company. This leads one to believe in the profitability of the Thai division as a separate unit.
Innovex’s major customer was Seagate, which required a special platform, which changed 2005-2006, causing Innovex to lose Seagate as a customer (and major revenue stream).
Innovex attempted to find other customers, re-styling its technology and restructuring its debt with BAY (Bank of Ayudhya) and TMB. It also gained new management, and the company recorded 25% Quarter-on-Quarter growth in the 3rd and 4th quarters of 2008. However the financial crisis caused a reduction in demand, and orders decreased significantly, causing Innovex to be unable to pay back shorter-term loans.
As a result of this illiquidity, Innovex Thailand attempted to restructure its debt with BAY and TMB, formally initiating the process in February 2009. However, no mutual solutions were found by July 2009, so PricewaterhouseCoopers was appointed as financial advisor to the company to work with it, BAY, and TMB.
PricewaterhouseCoopers recommended that the existing debt (~US$55 million) be sold to another investor, and BAY and TMB agreed that there will be no further re-structuring with regards to those two companies, but that they would indeed sell it to one or more investors who could work out restructuring with PWC and Innovex. The only known potential investor is Standard Chartered Bank, who could buy the debt from BAY and TMB.
December 2009: Innovex signed a mandate letter with Standard Chartered indicating that it will work with the bank on an exclusive basis for 90 days to restructure its capital. As of this bankruptcy filing, Standard Chartered is willing to buy the debt from BAY and TMB at a discount and to provide working capital (US $10 million) for Innovex, given a due diligence and negotiations process. As of March 2010, the due diligence was completed, and Standard Chartered was waiting on internal approvals and agreements from TMB and BAY.
“Any possible transaction with SCB will be contingent upon SCB’s completion of its due diligence and definitive documentation, internal approvals of SCB and acceptable agreements with the Company’s current banks and arrangements or settlements with the Company’s other creditors. Any financing provided by SCB would likely result in a conversion of debt to equity with SCB holding a significant majority of the equity of the Company. Any such financing would also be subject to compliance with any relevant applicable laws, rules and regulations.”
Additionally, Standard Chartered hired external consultants to interview the supply chain companies such as Arrow Electronics and RBP Chemicals, validating that all suppliers indicated willingness to provide support and work with Innovex to supply materials and equipment during operation. Additionally, Standard Chartered determined the minimum value of the company’s assets to be $35 million, if not more.
When customer demand increased in 2009, the company had inadequate working capital, and was unable to make raw material purchases even when orders came in.
At the time of the event on file (April 2, 2010), Innovex Thailand had hired external consultants to interview and review potential customers, who validated the positive response from customers and the potential business for the company upon restructuring.
Innovex holds proprietary technology on processes and recipes for the making of high density flexible circuits in large volume (and is one of few competitors capable of making high-end, sub-100 micron applications)
Insider Holdings:
Nigel Cornick: 19.73%
Wisconsin Pensions: 9.72%
Perkins Capital Management: 4.61%
Terry Dauenhauer: 0.97%
Douglas Keller 0.17%
Brian Dahmes 0.12%
Paul Solit 0.02%
(Report Source: SEC EDGAR Filings)
(Holdings Source: Bloomberg)
I am not an investment professional, my views are just my views, just as these facts are simply facts.
I am not currently holding this stock
