On 8 June 2012 Anchorage Capital Partners, an independent Australian private equity manager, announced the signing and completion of its investment in First Engineering Limited. Established in 1979, First Engineering is headquartered in Singapore, and is one of the leading precision plastic injection moulding (PIM) manufacturers serving multi-national corporations in Asia.
In August 2007, First Engineering was privatised, following privatization the performance of the business materially declined due to several factors, including high leverage under the acquisition structure, combined with soft global demand flowing from the global financial crisis.
First Engineering subsequently defaulted on its senior debt facilities due to breach of covenants, and was taken over by the Senior Lenders through a credit bid in September 2009, ensuring the survival of the business. Anchorage identified the business through its Asian network, and agreed indicative terms in late 2011, including a period of exclusive due diligence, ultimately leading to completion in June 2012.
First Engineering has six production facilities in Malaysia, China (Shanghai, Suzhou, Guangzhou), Singapore and India, with more than 2,500 employees. The business designs, engineers and produces components for business machines, hard disk drives, automobiles and medical devices
Daniel Wong, Partner of Anchorage and new Chairman of First Engineering, said: "Despite the stress placed on the business over an extended period of time the underlying quality of the business remains. We have identified a large number of turnaround initiatives that will markedly improve earnings. The turnaround program has already commenced, with Anchorage well entrenched in the business.” Anchorage will focus on improving the core operations of the business and continue diversification into the healthcare and automotive sectors. Following completion of the sale process the business has a substantially improved balance sheet.
Chief Executive Officer, Brian Smith who was appointed in June 2011, and will continue with the business, said: “First Engineering now possesses one of the most experienced management teams of any PIM manufacturer within the Asian plastics industry. The combination of First Engineering's management team and Anchorage's turnaround focus will create a strong strategic combination and elevate First Engineering to the top of its competitive set.” Brian has already made significant progress in stabilising the business, and will drive the turnaround program in partnership with Anchorage.
During the due diligence phase Anchorage sought the appointment of Neo Age Seng as Chief Operating Officer. Neo was appointed in May 2012 and has extensive experience in PIM operations. Neo is extremely well known to Anchorage having previously partnered with Anchorage in its investment in Omni Plastics.
Daniel Wong will join the board as Chairman, along with his Anchorage colleague Phil Cave.
More details -
Daniel Wong, Partner
Anchorage Capital Partners
Anchorage was formed in 2007 and currently has A$200 million committed capital. Anchorage targets investments in businesses with a strong brand and leading market position, which are materially underperforming. Anchorage drives the turnaround program directly through active involvement in the business, leveraging its significant experience in operational management, business leadership, corporate finance and, strategy.
First Engineering Pty Limited
First Engineering has six production facilities in Malaysia, China (Shanghai, Suzhou, Guangzhou), Singapore and India, with more than 2,500 employees. The business designs, engineers and produces components for business machines, hard disk drives, automobiles and medical devices.