Directed, LLC (“Directed”), is a Vista, California-based producer of automotive aftermarket electronics. Directed, a world leader in automotive electronics, is the largest North American designer and marketer of consumer-branded vehicle security and remote start systems, and a pioneer in the connected car space. Its products connect more consumers to their vehicles than anyone else on the planet. Directed markets its broad portfolio (sold under Viper®, Clifford®, Python®, Autostart®, AstroStart®, Alcohol Detection Systems® and other brands) through leading national retailers and specialty chains.
In March, Directed experienced significant operational and cash flow challenges due to the impact of the global COVID-19 pandemic. It’s customers, who represent leading national automotive after-market retailers and specialty chains, experienced a significant decline in store traffic and related consumer spending, especially on account of actions taken in response to the public health crisis. Mandated store closures significantly contributed to missed sales targets and resulted in unsold inventory.
Faced with a liquidity crisis, Directed engaged G2 Capital Advisors, LLC (“G2”) as its restructuring advisor. Directed’s board of directors tapped G2 Managing Director Jeffrey T. Varsalone to serve as Directed’s Chief Restructuring Officer (“CRO”). Through the CRO, G2 developed and executed liquidity management tactics to maximize runway for a potential restructuring transaction and assessed strategic options for the Company and its stakeholders. With a focus on maximizing value for creditors and preserving jobs, G2 provided the board with restructuring expertise in negotiating a consensual resolution with the Company’s lender and facilitating a restructuring transaction that preserved the going concern. G2 teamed with Livingstone Partners, LLC, which ran an expedited sale process as the Company’s investment banker.
Implementing tight liquidity management measures, G2 assisted Directed in negotiating a series of forbearance agreements without creating additional exposure for the Company’s senior lender. As a result of the ability to avoid incremental risk to the senior lender, the Company had sufficient runway to consummate two asset sale transactions in July 2020 that preserved the value of the going concern. The first was the sale of Directed’s Remote Start & Security and Connected Car Solutions businesses to VOXX International Corporation (NASDAQ: VOXX), a leading manufacturer and distributor of automotive and consumer technologies for the global markets. The second was the sale of Directed’s ignition interlock device business, Alcohol Detection Systems (“ADS”), to CST Holding Company (“CST”). CST is a portfolio company of private equity firm Welsh, Carson, Anderson & Stowe (“WCAS”) and also owns the nation’s largest ignition interlock brand, Intoxalock.