APS, Inc.

Client

APS, Inc., headquartered in Houston, TX was the third largest after-market auto parts distributor in the United States at the end of its 1998 fiscal year (January 31, 1998). With annual revenues of approximately $800 million. APS supplied over 1,650 parts stores owned by associated jobbers and 273 Big-A Company-owned stores and 214 Installers Service Warehouses ("ISWs“)). The Company principally served the wholesale segment of the automotive parts aftermarket through a network of 27 distribution centers in 26 states.

Challenge

As a portfolio company largely owned by Clayton Dubilier & Rice, APS made a series of complete or partial acquisitions of components of competitors in the four years before it filed for bankruptcy in February 1998. These included Parts, Inc (1997), Rankin Automotive (1996) and Sieg Company (1994). These companies were never properly integrated so that by 1998 there were at least four discrete point of purchase systems and multiple accounting systems operating in the Company. Monthly consolidations required a great deal of manual manipulation and were frequently inaccurate as to actual cash flow availability and inventory levels. In addition, APS launched an expensive alternative to its traditional three tier distribution concept called Installer Service Warehouse (ISW). ISW was a to tier system aimed at jobbers who needed immediate delivery of hard to access parts not normally carried in all outlets. Unfortunately this concept never really caught on and was extremely costly because of the need to run dedicated trucks to the clients with each order. Pricing in the ISW network was also a problem. As a result of its problems with integration of its acquisitions and the high cost of maintaining the ISW franchise, the Company was unable to service its debt. The Company attempted to reorganize but ultimately determined that the best return for creditors would come from the liquidation of substantially all operating assets. Bridge professionals were hired by the CEO, Bettina Whyte, to assist in this liquidation by working with the Companies investment bankers, The Blackstone Group, to package operating assets for them to market.

Solution

Bridge professionals worked closely with the Company's investment bankers to effect the sale of all ongoing operations and with Company personnel to liquidate inventory remaining after the sale of all operations.

Results

Thirty seven distribution centers, 500 company stores and $37 million of inventory were successfully sold. The senior lenders were ultimately repaid in excess of $185 million.