Brea’s Krystal Koach Inc., one of the largest makers of limousines, is set to be sold to a Chinese investor and end a brief stint in bankruptcy, according to a court filing.
Krystal Infinity LLC, a Nevada holding company formed by Chinese businessman Winston Chung, is expected to buy the limo maker for $9 million.
The cash deal is expected to close this month. It still could fall through or see a change in terms, according to a source familiar with the situation.
Chung is president of Thunder Sky Energy Group Ltd., a Hong Kong maker of batteries and electric vehicles, including limousines, buses and motorcycles.
He also runs Winston Batteries Ltd., a maker of lithium ion batteries.
Krystal Koach, which filed for Chapter 11 bankruptcy protection in Santa Ana in November, is expected to keep administrative operations in Brea, according to Philip Gasteier of Los Angeles-based law firm Levene, Neale, Bender, Yoo & Brill LLP, which represented Krystal Coach.
“We, as bankruptcy counsel and creditors, are happy the ongoing business has been preserved,” he said.
Most of Krystal Koach’s manufacturing moved to Mexico in the past few years as the company sought to cut costs as demand for limos fell.
The company’s now focused on marketing and distribution, rather than manufacturing, according to Krystal’s bankruptcy filing.
The company’s operations peaked in 2007 when annual revenue topped $150 million. At the time, Krystal operated out of three Brea facilities totaling more than 300,000 square feet and had more than 800 workers.
According to court documents, revenue fell to $100 million in 2008 and $35 million in 2009. Sales were $50 million last year.
Krystal’s founder and president, Ed Grech, is set to stay on in an executive position.
In a separate agreement, Grech is set to assume a 50% stake in the new company in exchange for property.
It’s not known what property is being traded. Affiliates of Krystal own the company’s headquarters on Imperial Highway near the Orange (57) Freeway and another local building.
“This partnership enables us to continue our legacy of innovation, “ Grech said.
The related deal was disclosed to creditors and the court and didn’t need judicial approval, Gasteier said.
As part of the sale, $6 million in proceeds are set to go to Comerica Bank, which lent Krystal more than $7 million. Some remaining debt is being assumed by the buyer, Gasteier said.
Another $500,000 of sale proceeds will be put in a trust, pending further orders of the court, he said. The rest of the money is set to go to creditors.
Buyer is Creditor
Thunder Sky is listed as one of Krystal Koach’s 20 largest unsecured creditors. A mix of equipment financiers, banks and trade partners are owed about $12 million.
Thunder Sky made a $1 million loan to Krystal last year.
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 makes stretch Ford and Lincoln limousines, sport utility vehicle limousines, shuttles, hybrid buses and hearses.
Krystal has an estimated 30% of the market for stretch limos.
It sells vehicles to limousine operators, dealerships, corporations, casinos and individuals.
