LOS ANGELES—An apparently leaner Lexington Precision Corp. has emerged from bankruptcy protection with less debt and a new majority owner, Aurora Resurgence.
An affiliate of Aurora Capital Group, Aurora Resurgence said it successfully reorganized the manufacturer of rubber components for the automotive, medical and industrial markets.
It recently purchased public debt of Lexington and converted those securities into equity to help the firm exit bankruptcy court protection July 30.
Los Angeles-based Aurora then made a direct cash investment in Lexington to fund the company's reorganization. On Aug. 11 it said it now owns a majority interest in the firm, estimated by an official at about 72 percent. Members of Lexington's management team have a 24-percent stake.
Financial and numerous other details about the transaction were not disclosed by the companies or their representatives. No changes in the firm's management team, led by CEO Michael Lubin, are expected. The company employs about 650.
Lubin said the maker of tight tolerance rubber components always has had great competitive strengths, but had “an overly burdensome level of debt” prior to filing for protection under Chapter 11 in the U.S. Bankruptcy Court in the Southern District of New York in April 2008.
He said the Aurora group recognized this and helped the company use the reorganization process to create a strong balance sheet and substantial liquidity.
While the company did not disclose how much debt it reduced, a proposal presented to the bankruptcy court earlier this year indicated Lexington's debt would be cut by more than $50 million.
New York-based Lexington filed for bankruptcy in 2008 because its automotive business was declining, its debt was climbing and it was losing money.
It then failed to reach accord with members of an ad-hoc committee of the firm's senior unsecured note holders, which helped prolong its stay under Chapter 11 because both company and committee officials continued to squabble.
Finally, two years and four months later the firm emerged from court protection with Aurora as its majority owner.
Lexington operates two business segments—a rubber group and a metals group—and three plants that primarily make rubber components. Its Jasper, Ga., site manufactures replacement as well as original equipment auto parts; a facility in Rock Hill, S.C., specializes in medical components; and a North Canton, Ohio, factory produces liquid silicone rubber products. It also has an engineering center.
For 2009, the firm posted sales of $61.6 million, with $52.3 million of that coming from rubber products, according to a filing with the Securities and Exchange Commission. That compared with 2008 revenue of $73 million, with rubber goods accounting for $62.3 million.
While the company was in bankruptcy in March 2009, it closed a plant in Vienna, Ohio, and eliminated about 150 jobs. The factory produced rubber OE parts for the auto industry.
Lexington's rubber components are used in the medical, automotive and industrial fields. Medical products include injection sites for intravenous feeding systems, plunger tips for syringes and seals for minimally invasive surgical instruments.
Automotive products include seals for wiring systems and insulators for original equipment and aftermarket ignition wire sets.