Brea’s Krystal Koach Inc., one of the country’s largest makers of limousines, has filed for bankruptcy protection and is up for sale.
The company, which at its peak saw close to $150 million in yearly revenue before demand for limousines plummeted during the downturn, filed for Chapter 11 bankruptcy protection about a week ago in Santa Ana.
The bankruptcy petition for the company, which also operates as Krystal Enterprises, lists $10 million to $50 million in both assets and liabilities.
The company’s 20 largest unsecured creditors—a mix of equipment financiers, banks and trade partners—are owed about $12 million.
Krystal also has outstanding secured loans of more than $7 million with Comerica Bank, in addition to letters of credit with the bank, which is pushing for a sale or liquidation.
The company has been “actively” marketed for sale since January, according to court documents.
The prepackaged bankruptcy filing could help close a deal with a prospective investor from China, according to court filings.
Krystal is seeking interim financing of $2.5 million from Seven One Ltd., which has ties to Thunder Sky Energy Group Ltd., a Hong Kong maker of batteries and electric vehicles, including limousines, buses and motorcycles.
Thunder Sky is listed as an unsecured creditor in Krystal’s bankruptcy filing after making a $1 million loan to the company earlier this year.
A company controlled by Thunder Sky’s president, Winston Chung, is expected to make a bid for Krystal, according to court records.
Terms of the proposed sale to Thunder Sky weren’t disclosed. The price is likely to be more than the $9 million credit bid that Comerica is entitled to make, either through a court-approved plan of reorganization or liquidation, according to court records.
How much change a sale would have on the company’s operations in Brea is unclear.
For now, it’s “business as usual,” founder Ed Grech said in a statement.
Krystal’s already seen a heavy amount of layoffs in the past two years as the bulk of its manufacturing work moved to Mexico.
Brea Operations
Remaining administrative operations are expected to stay in Brea, according to Chief Financial Officer Walter Bowser.
Krystal got its start nearly 30 years ago when Grech was working in auto repair and suggested to employees that a fire-damaged Cadillac be cut in half and stretched into a limousine.
The company now boasts a product line that includes stretch Ford and Lincoln limousines, sport utility vehicle limousines, shuttles, hybrid buses and hearses.
Krystal has an estimated 30% of the market for stretch limousines.
It sells vehicles to limousine operators, dealerships, corporations and individuals.
Grech is the company’s president and sole shareholder. He’s considered a “senior patriarch in the custom coach industry,” according to court filings.
Locally, Grech has made a name for himself in social circles through hosting political fundraisers. He was a big supporter of former sheriff Mike Carona.
Grech Stake
Grech has an agreement to obtain an undisclosed stake in the company acquiring Krystal in exchange for property.
Affiliates of Krystal own the company’s headquarters on Imperial Highway near the Orange (57) Freeway and another local building.
Grech is expected to remain president of the company after a sale to Thunder Sky, according to Bowser.
Krystal’s operations peaked in 2007 when annual revenue topped $150 million. At the time, the company operated out of three Brea facilities totaling more than 300,000 square feet and had more than 800 employees.
Since then, the business has been hit by the economic downturn and fewer limo orders.
Delayed Orders
Las Vegas casinos have put off buying limos in the past couple of years, opting to wait for a “highly anticipated” new line of Ford-Lincoln Town Car limousines, which are expected to be introduced in 2012, according to Krystal.
In 2008, revenue at Krystal fell to about $100 million and then $35 million in 2009. The company now employs about 100 people.
Starting last year, Krystal moved two of its three production facilities to Mexico. The company’s now focused more on marketing and distribution, rather than manufacturing, according to Krystal’s filing.
If the Thunder Sky deal is completed, Krystal is expected to come out with an electric sedan and bus next year, according to the company.
