Emerges from Chapter 11 Protection with Strengthened Balance Sheet and Well-Positioned for Success
Donald Hampton, Jr. Named CEO to Drive Company’s Go-Forward Growth Strategy

FAYETTEVILLE, Ark., June 2, 2020 /PRNewswire/ — Pace Industries, LLC (“the Company”) today announced that it has emerged from Chapter 11 bankruptcy protection, successfully completing its financial restructuring plan to deleverage the Company’s balance sheet and create a sustainable capital structure. This milestone marks the implementation of the Company’s Plan of Reorganization (“the Plan”), which was confirmed by the U.S. Bankruptcy Court for the District of Delaware on May 29, 2020. The Company completed its restructuring in approximately a month and a half and met all commitments to the Company’s stakeholders throughout the Chapter 11 process.

The Company emerges from Chapter 11 protection with a strengthened balance sheet and well-positioned to realize the full benefit of its previously initiated operational improvements as well as additional cost structure improvements. Through the Plan, the Company has converted its existing senior secured notes into 100% of the equity of the reorganized Company and looks forward to benefiting from the support and operational expertise of its two largest senior secured lenders, TCW Group and Cerberus Capital Management, L.P.
Effective immediately, Donald (Donnie) Hampton, Jr. has been appointed as Chief Executive Officer to lead the Company going forward.

“We begin this next chapter for Pace Industries as a financially stronger company, which will enable us to capture the full benefit of the cost-saving initiatives implemented prior to the COVID-19 outbreak as well as new market strategies,” said Donnie Hampton, Jr., incoming Chief Executive Officer. “I am excited to lead Pace Industries forward as we execute on our strategic growth opportunities and continue to harness our market-leading capabilities to deliver for our customers as a fully-integrated provider.”
Mr. Hampton joins Pace Industries with more than two decades of industry experience and global P&L leadership. He has leveraged Six Sigma, Kanban, JIT and synchronous manufacturing strategies for companies such as Honeywell International (previously Allied Signal), Hayes Lemmerz, Rea Magnet Wire Company and, most recently, Faurecia. In his roles he has consistently ignited revenue and profit growth, equity value creation and world-class standards of operational excellence. He is a member of the Association for Manufacturing Excellence, Automotive Industry Professionals Worldwide and OPEX – Global Operating Excellence Network.
Outgoing Chief Executive Officer Scott Bull will be supporting Mr. Hampton in an advisory capacity to ensure a smooth transition. The Board is grateful to Mr. Bull for his 41 years of service to the Company – including 12 years as Chief Executive Officer – and wishes him well in his future endeavors.
“Pace Industries has a bright future ahead of it, and I am confident handing the reins to Donnie, who I know will do an outstanding job leading the Company,” said Scott Bull. “He is committed to maintaining the same energy with which Pace Industries serves its customers and provides high-quality products to meet their unique needs. Donnie’s experience and leadership will help the Company execute on its strategy and position Pace Industries for success.”

Looking forward, the Company plans to pursue a new go-forward growth strategy, focused on building its position in key industries and expanding in growth markets. Pace Industries will continue to keep customers at the core of everything it does and, with a bolstered financial foundation, is poised to invest in the capabilities to meet their needs now and in the future. The Company will continue to maintain and build on its current standards for safety, quality and corporate citizenship moving forward.

“From the implementation of new programs and initiatives, through the COVID-19 outbreak and this Chapter 11 process, this Company would not have been able to reach today’s milestone without the dedication and support of our team members,” Mr. Hampton continued. “I look forward to meeting many of the Company’s employees and customers in the weeks and months to come and am excited to roll up my sleeves and get to work.”
Filings and additional information on the Company’s emergence from bankruptcy can be found at http://www.kccllc.net/pace.
The Company was represented in this matter by Willkie Farr & Gallagher LLP and Young Conaway Stargatt & Taylor, LLP. FTI Consulting served as financial advisor. The senior secured noteholders were represented by Schulte Roth & Zabel LLP and the revolving credit facility lenders were represented by McGuireWoods LLP and Conway MacKenzie.

Expects to Deleverage Balance Sheet, Creating Sustainable Capital Structure

Initiates Voluntary, Prepackaged Chapter 11 Process to Achieve Its Financial Goals

Anticipates Completing the Process in Q2 2020, Paying All Unsecured Creditors in Full

FAYETTEVILLE, Ark., April 12, 2020 /PRNewswire/ — Pace Industries, LLC (“the Company”) today announced that it has reached an agreement with its senior secured lenders on the terms of a comprehensive financial restructuring plan, which will deleverage the Company’s balance sheet. This agreement has support from 100% of the holders of its senior secured notes as well as its revolving credit facility lenders.

Upon implementation, this agreement will give the Company the financial foundation necessary to resume normal-course operations following the COVID-19 outbreak, realize the full benefit of its cost-savings initiatives and strategic investments recently executed, and continue to serve its customers as a leading fully-integrated provider of die cast aluminum, magnesium and zinc components.

To effectuate the plan and facilitate these important changes to the Company’s capital structure, the Company and its U.S. subsidiaries have initiated a voluntary prepackaged Chapter 11 process in the U.S. Bankruptcy Court for the District of Delaware.

The Company’s operations in Mexico are unaffected by the filings, although they will benefit long-term from the actions the parent company is taking to strengthen its financial position.

The Company’s senior secured noteholders, along with its existing revolving credit lenders, will provide commitments for up to $175 million in debtor-in-possession financing to help ensure that the Company can meet its commitments during the process. Under the terms of the proposed prepackaged plan, the Company will convert its existing senior secured notes into 100% of the equity in the reorganized Company. As a result of its noteholder and lender support, the Company expects to complete the process in the second quarter of 2020 – emerging as a financially stronger company that is well-positioned to succeed in the post-COVID-19 environment.

“Over the past two years, we launched significant new programs for the automotive industry to further penetrate this important growth market and implemented a series of cost-saving initiatives to position our business for long-term success,” said Scott Bull, Chief Executive Officer. “Unfortunately, we were not able to realize the full benefits of these new programs and initiatives before the coronavirus weakened demand, disrupted our supply chain and forced us to temporarily close many of our plants in the United States.”

“We are confident in our go-forward direction and the underlying strength of our business and are taking these actions now to ensure we are positioned to realize our full potential when we – and our customers – are able to resume normal-course operations,” Mr. Bull continued. “We thank our lenders, employees, customers and suppliers for their support and look forward to being an even stronger partner as a result of the actions we’re taking to enhance our financial position.”

The Company has filed customary motions that will allow it to maintain employee wage and benefit programs, honor customer warranties as usual and continue to pay suppliers. Although the motions remain subject to Court approval, the Company expects that all trade creditors, employees, sales agents and unsecured creditors will be paid in full and on time in the normal course of business. Additionally, the Company will maintain all of its current standards for safety, quality and corporate citizenship both during and after the Chapter 11 process.

Further information about the case can be found at http://www.kccllc.net/pace or by calling (866) 967-0269 (in the U.S. and Canada) or (310) 751-2669 (outside the U.S. and Canada). Implementation of the restructuring plan and other relief is subject to Court approval, regulatory approvals and other customary closing conditions.

Pace Industries is represented by Willkie Farr & Gallagher LLP and Young Conaway Stargatt & Taylor, LLP. FTI Consulting is serving as financial advisor. The senior secured noteholders are represented by Schulte Roth & Zabel LLP and the revolving credit facility lenders are represented by McGuireWoods LLP and Conway MacKenzie.

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About Pace Industries, LLC

Pace is North America’s leading full-service aluminum, zinc and magnesium die casting company. Pace offers end-to-end, nonferrous, die cast supply chain solutions, and a wide array of capabilities and services, including advanced engineering, tool and die fabrication, prototyping, precision machining, assembly, finishing and painting. Headquartered in Fayetteville, Arkansas, Pace operates the largest number and broadest range of clamping force die-casting machines in North America, which has positioned Pace uniquely to offer die-cast products for practically any customer requirement. Indeed, Pace is the only vertically integrated major die casting supplier in North America providing customers one-stop-shop services on a mass scale. For more information, visit www.paceind.com. 

This press release is for informational purposes only and shall not constitute a solicitation to accept or reject the Prepackaged Plan or an offer to sell or the solicitation of an offer to buy securities, nor shall there be any offer or sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Media Contact:

John Wisdom

+1 (479) 973-2164

John.Wisdom@paceind.com

Port City Division (PCD), a division of Pace Industries, has long stood as a well-respected Aluminum Die Cast supplier to a majority of the automotive industry. In 2000, they established Port City Custom Plastics (PCCP), hoping to further serve their current customers through plastic products. Specializing in plastic injection molding, PCCP quickly found their niche within their automotive and recreational vehicle customers that PCD had already served with aluminum products. Plastic seems to be a popular trend in many industries right now, as many customers are looking for an economical advantage. PCCP gives Pace Industries the opportunity to support those customers who are looking for that advantage by providing plastic injection molded products.

PCCP also compliments the die casting locations by providing overmolding options, a task that used to be outsourced that can now all be handled in-house further serving the customer. PCCP quickly grew working side by side with the die casting operations which allowed PCD to better serve their customers.

Almost 20 years later, PCCP has expanded into many new industries. Along with automotive they now serve the appliance, office furniture, roofing, and industrial control industries, and are seeking opportunities to serve new industries. Seeing the potential for growth, PCCP has begun to equip themselves, first by hiring a new sales manager who is dedicated to the growth of PCCP, secondly specializing in over 12 plastic materials, with nylon, polypropylene, HDPE, LDPE, Acetyl, polycarbonate, and PBT, being a few.

PCCP has continued to see success in the fast-changing automotive industry.  This industry pushes design to the limits, looking for parts that are lighter but stronger and at the same time thinner yet still safer, and often the responsibility of creating these innovative parts becomes the job of the supply base.  This is when PCCP thrives, being able to respond to industry needs and produce parts that are significantly lighter than their metal counterparts. PCCP has continually provided improved product quality for customers who are looking for those weight reductions and better product longevity.

PCCP has also found success in the roofing industry. Many homes in the northern states have roofs that are reinforced with ice/snow supports, which have in the past been made of steel. These parts would cost customers nearly $25 per piece. The engineering expertise at PCCP designed plastic pieces that would not sacrifice on strength or longevity of the parts but were priced around $10 or less per piece.  Additionally, the plastics could easily be colored to match the varying roof colors. Not only did PCCP improve the quality of these products, but helped to reduce the cost.

PCCP is located in Muskegon, Michigan along with the other PCD die casting facilities. This location has proven to be very strategic whether it be for the home construction industry, or being a few hours outside of the automotive capital of the world, Detroit. Being positioned in the Midwest provides a logistical advantage to PCCP and provides improved logistical expenses.

PCCP has quickly grown into an integral piece of Pace Industries, and gives us countless opportunities to further serve our current customers and to broaden our reach to new ones. We believe that PCCP helps give us a competitive advantage over our competitors and we know that PCCP can help you to achieve that same advantage.

If you have any questions or would like more information regarding Port City Custom Plastics or Plastic Injection Molding, please reach us here.

In recognition of our years of cooperation with Pace and Harrison’s Northark College, Pace Industries was presented with the first Northark Board of Trustees Partnership Award at the school’s commencement ceremony on May 6^th.

Over the years, Pace and Northark College have cooperated to support one another in their endeavors, strengthening both the relationship of the organizations and their ability to service their students and clientele. Northark has even developed customized workforce training and specialized class offerings to help train more skilled workers for Pace’s operations.

When these classes needed equipment to provide the best possible training, Pace donated and installed a $150k die cast machine at the school. Many Northark graduates from these classes went on to join the Pace team, with the graduates’ specialized training improving the quality of Pace’s work nationwide.

Pace and the Northark Foundation have worked together to establish a scholarship to assist manufacturing technology and industrial electronics students with their tuition. Each year, Pace donates $20,000 to support aspiring manufacturing professionals and foster job growth in the Harrison community.

“Pace has been such a good friend to this College over the years. The board felt the time has come to recognize their contributions by creating an award to recognize the vital importance of our business and industry partners,” said David Evans, Chair of the Award Committee and Northark board member.

It’s not only in Harrison that Pace is working to improve education within the community. Pace is partnering with 70 high schools and technical colleges nationwide in an effort to educate students and be a community leader in those locations.

Patterson Division (in St. Charles, MO), along with other industry leaders, sits on several advisory boards for many of Ranken College’s programs. Industry leaders look to hire as many Ranken students as possible. Student tours are constantly coming through the plants so that students can connect classroom theory with real world experience.

At our Product Tech Industries Division, Pace works with Wright Technical Center in Maple Lake, MN. Their partnership is one that supports students’ desire to explore career opportunities through state registered youth apprenticeships. Students are able to work at PTI and gain school credit, while earning a good wage for their efforts.

Pace’s long-term goal with school involvement is to show students that advanced manufacturing does not happen in dark, grimy buildings, but in places that make use of new technologies and skills that translate into rewarding, lifelong careers. Pace is looking to usher in a new generation of leaders in advanced manufacturing. Proud to be the first to accept this award from Northark, Pace is committed to growing and maintaining our participation with the college. This kind of acknowledgement from partners and clients keeps us confident that we’re fulfilling our mission to provide the highest quality in casting and manufacturing.

 

Lightfair 2017 is just around the corner, with the 2017 event being held from May 9^th to the 11^th at the Pennsylvania Convention Center in Philadelphia. Lightfair 2017 will play host to members of the architectural and commercial lighting industries, as they meet to learn about new solutions, knowledge and discoveries in lighting.

A hot topic at Lightfair 2017 is sure to be LED technology, with improvements to the technology a focal point of discussion. Pace is excited to attend and learn more about the technology.

One of Pace customers’ primary concerns is to dramatically reduce lead time to market. With LED technology improving so rapidly, the lighting company able to bring that new LED technology to market first, will dominate. Pace is assisting customers on the front end, with early supplier involvement (ESI) in the engineering and design of LED castings. By also getting designs to be die cast friendly, reducing their weight, and making them as cost-effective as possible, Pace is meeting customer demand.

By addressing these concerns at the beginning of the process, Pace can generate a quote faster, get their tool shops involved quicker, and reduce the lead time to build new tools. This is enabling customers to get their product out into the market faster than their competitors.

While Pace will not be showing at Lightfair 2017, they will be present to meet with industry experts to learn about advances in the lighting industry, and what role they will play in the future of lighting. Stay tuned for what they learned at the show.

Pace’s Port City Division was recently awarded a Certificate of Achievement at Toyota’s Supplier Conference. A casting division of PCD supplies Toyota with the vacuum pump bracket used for the hydraulic brakes in the Toyota Tacoma TRD Off Road package. The certificate was awarded to PCD for achieving a 100% on-time delivery rate and a zero PPM defective for the year of 2016.

A PPM (Parts per Million) score relates to the number of parts per million that are defective. If a supplier produces 10,000 parts and just one of those parts is defective, that supplier has a PPM of 100. PCD was responsible for production of over 30,000 parts, a relatively small number, but achieved a PPM of zero. While many other companies avoid taking on smaller production volumes, PCD was able to deliver these parts with a zero PPM, while remaining 100% on time.

Being on time once is easy. Being on time thousands of times, across all areas of production, throughout an entire year is a difficult task without doubt. In 2016, PCD not only met Toyota’s strict production requirements, they did it on time every time. Being on time saves the customer downtime, money, and in the end, cultivates a sense of trust between supplier and customer. When a customer knows they can depend on the supplier, they don’t need to look elsewhere.

Not only is PCD responsible for the casting of the part, they also provide secondary machining and assembly for the vacuum pump bracket. PCD machines the part, inserts a gasket (assembly), and then pressure tests the assembly to ensure the highest quality and functionality is being delivered to Toyota.

With Port City Division able to offer these secondary operations, they provide an added value to their customers. While competitors may only supply the raw casting, PCD goes above and beyond to ensure that whatever they produce is being sent to the customer when they need it and how they need it. The secondary operations for this part include machining, blast finishing, assembly, and pressure testing.

This award from Toyota stands as a testament to the Port City Division’s uncompromising commitment to excellence, upholding the values of Pace as a whole. By accommodating all processes in-house, PCD helps Toyota optimize their total cost by providing an end to end solution, saving time and money. At PCD, our culture of zero defects and exceeding our customers’ expectations ensures that partners like Toyota remain just that.

Pace is remarkably proud of our recognition by the National Aluminum Die Casting Association (NADCA). Multiple divisions within the company received NADCA Safety Awards this year, which marks 12 consecutive years we have received these prestigious industry awards.

According to NADCA, the frequency and injury rates for the die casting industry are approximately twice those of other private industries. So safety is a big concern for the industry. To be recognized within the industry for exceptional safety standards is a significant honor, and it shows that our commitment to the issue is making a difference.

About the Award

The NADCA Safety Award Program was developed to honor Corporate Members that both exceed and meet the average U.S. national safety standards for all manufacturing in a given year. There are two award levels within the program. Perfect Safety award winners have an incident rate of 0.00, while Outstanding Safety award winners are companies with a 4.00 or less of total recordable cases. That number is an average of the entire manufacturing industry.

Incidence rates are based on the number of injuries and illnesses per 100 fulltime workers. The average is calculated by the number of injuries and illnesses divided by total hours worked by all employees during the calendar year.

Recognition for Pace

Overall there were nine divisions within Pace that were recognized this year. B&C achieved the highest award for Perfect Safety. Harrison, which has a particularly strong safety record, received the Outstanding Award for the 12^th year in a row. Two of those years were for Perfect Safety.

Other Outstanding Safety awards this year were given to Patterson Mold & Tool, Airo, Product Tech, Grafton, Cambridge, St. Paul, and Mangas Tool & Die.

Award winning companies will be featured in the May issue of DCE magazine and will be recognized during a luncheon at NADCA’s Die Casting Congress & Tabletop in Columbus, Ohio, September 26-28, 2016.

Planned Progress

To a large extent, our positive results are due to our Health & Safety Management System (HSMS) and our employees’ commitment to safety. Each division is responsible for implementing four elements within HSMS: Management Commitment & Associate Involvement, Worksite Analysis, Hazard Prevention & Control and Training. To hold ourselves accountable, the corporate health & safety department audits and scores each division every two years.

A few initiatives of HSMS include:

Making safety personal: Each Pace associate is asked to create his or her own Personal Safety Pledge. This could be anything from not texting and driving, remembering to wear seatbelts, and wearing proper PPE while using shop tools.

Having high expectations for contractors: The HSMS requires outside contractors working at Pace to receive the same high quality safety training as associates. They must follow the same rules and policies, as well.

Improving health & wellness: We have held health clinics where Health Risk Assessments are provided to encourage associates and their families to improve their health and prevent serious illnesses.

 

A Measureable Difference

Pace has decreased the recordable incident rate 75% from 2011 to ending 2015. This is due in large part to our CEO, Scott Bull and the executive team’s commitment to safety, as well as all of the associates at Pace, being focused on improving the safety culture.

We’ve learned that when we hold each other accountable to make good, safe choices on the job, we create a safety 24/7 culture. This means greater efficiency for our customers and a better work environment for our associates where they feel valued and safe.

Our commitment to safety is unconditional, and working safely is a condition of employment. We believe all accidents are preventable, and we have clear goal to achieve zero injuries. This should mean many more years of Safety Awards in our future.

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