PVI roped in by 'stalking horse'
It's a jungle out there in the dog-eat-dog world of corporate dealmaking and high finance. Maybe that explains why animal breeds became part of the business lexicon.
Think vulture investors or inflation hawks. Or bulls and bears.
In the matter of idled armored-truck maker Protected Vehicle Inc. , it was a couple of other four-legged creatures that factored into its upcoming $6 million sale to Patriarch Partners LLC.
First stop: the stables.
In July, some five months after cash-poor PVI sought bankruptcy protection, Patriarch stepped forward to say it would open the bidding for the North Charleston company's assets, guaranteeing at least $5 million for the business.
By setting the minimum for last week's auction, the New York-based investment firm was suddenly transformed into what finance types call a "stalking horse."
Next stop: the swine pen.
As part of its purchase agreement, Patriarch made a key concession stemming from a bitter legal dispute between the startup PVI and established crosstown rival Force Protection Inc. of Ladson.
The spat, filed in U.S. District Court in Charleston, has to do with the alleged theft of trade secrets by PVI executives who formerly worked for Force Protection. Both companies make heavy-duty, life-saving combat vehicles that can withstand blasts from land mines and other deadly explosives.
In short, Patriarch agreed to stick to its minimum $5 million offer for PVI even if the judge in that lawsuit finds later that the company did in fact swipe intellectual property from Force Protection and orders it to cease and desist. Patriarch, of course, is betting on a favorable ruling or possibly an out-of-court settlement.
PVI's smooth-talking bankruptcy attorney, Bill McCarthy, said he struggled to come up with a fitting metaphor for this calculated gamble. So he went to the critter well and drew on a timeless standby: "In effect, they're buying a pig in a poke," McCarthy said.
And not for $5 million, but $6 million. Patriarch founder and CEO Lynn Tilton agreed Thursday to up the ante by adding $1 million to her bid, instantly vanquishing a last-minute offer from — who else? — Force Protection. Small world, indeed.
Tilton told U.S. Bankruptcy Court Judge David Duncan that she will invest "at least" another $5 million to resume manufacturing, adding that several hundred employees could be working for PVI in six months if all goes according to plan.
To boot, Tilton said her firm will fund PVI's portion of the trade-secrets litigation with Force Protection.
Asked during a break in Thursday's proceedings why she wanted PVI so badly, she said: "You still don't know me. I'm trying to save American manufacturing jobs."
Tilton is best known in the Lowcountry as the brash, tough-as-nails Wall Street financier whose firm bought emergency vehicle maker American LaFrance from Freightliner in 2005.
That investment hasn't panned out as well as she had hoped, as she briefly acknowledged last week. Like PVI, American LaFrance ran into serious financial troubles and spent a brief spell operating under bankruptcy protection this year.
Tilton said PVI will fit in with Patriarch's other "military platform" businesses that provide vehicles for the armed forces, including MD Helicopters and American LaFrance. "Serving those who serve others," she said.
Tilton isn't worried about waning demand from the Pentagon for mine-resistant trucks, saying the overseas market is rife with opportunity.
Tilton hopes to keep PVI's operations on the former Navy base, but the new ownership group will have to renegotiate terms with the landlord, which has filed claims against PVI for more than $1.6 million in back rent and loans.
If that can't be worked out, the business could be shifted to American LaFrance's opulent new plant and headquarters near Jedburg.
Reach John McDermott at 937-5572 or firstname.lastname@example.org.