HUFFY CORPORATION

Case Highlights

• Sold non-core assets and downsized remaining business
• Refinanced existing bank debt and restructured debt and equity through a Chapter 11 reorganization
• Negotiated critical continuing business and trade terms with Chinese suppliers

Case Narrative

Huffy Corporation was a publicly held company that in 1999 was comprised of four business units: bicycles, sporting equipment, sports equipment assembly and inventory services.  Due to costs incurred in the transition of domestic production to foreign sourcing and lower margins due to increased competition, Huffy incurred operating losses and was in violation of loan covenants on its senior credit facility.  The existing senior lenders were unwilling to continue to provide financing on terms that were acceptable to Huffy and a bankruptcy filing appeared imminent.  DSI was engaged as financial advisors and obtained senior secured financing to replace the majority of the existing financing facility.  DSI then worked with senior management to implement a strategy to sell non-strategic operating units, using the proceeds to pay off the remaining balance of the original financing.  A bankruptcy filing was avoided and the existing shareholder value was preserved.

Huffy later expanded its business lines to include additional sporting goods, garden tools, baby products and retail services.  DSI was later retained again to assist Huffy with loan defaults as a result of declining profitability.  DSI participated in developing a strategy to streamline product offerings and divest non-core business units.  DSI was instrumental in negotiating continuing business and trade terms with Chinese Suppliers that allowed for a successful plan of reorganization through a Chapter 11 bankruptcy proceeding.