(October 8, 2010)
KPS Capital Partners, LP ("KPS") announced today that its portfolio company, HHI Group Holdings, LLC ("HHI"), completed its second successful recapitalization in 2010. The proceeds of the recapitalization – funded by a combination of a $30 million upsizing of the Company's term loan, cash on hand and the Company's asset-based revolving credit facility – were used to fund a $50 million cash distribution to stockholders.
Following the second recapitalization, HHI remains conservatively capitalized and has the continued support of KPS, its majority stockholder. KPS and minority stockholders, including MC Capital Inc., a subsidiary of Mitsubishi Corp., and HHI management, continue to own 100% of HHI's common stock.
HHI completed a $300 million recapitalization on March 31, 2010. The proceeds of the recapitalization were used to refinance outstanding debt, to fund a $150 million cash distribution to stockholders and to fund the Company's continued growth.
Financing for the transaction was provided by a syndicate of banks and institutional investors with Bank of America Merrill Lynch acting as Sole Lead Arranger on the upsizing of the Company's term loan.
Jenner & Block LLP served as legal counsel to HHI with respect to the transaction.
About HHI Group Holdings, LLC:
HHI Group Holdings, LLC is the largest independent manufacturer of highly engineered symmetrical and asymmetrical forged parts for various power train and wheel-end applications, a leading manufacturer of Generation III wheel bearings, and one of the few manufacturers of engine timing systems for the North American automotive industry. The company operates through its Jernberg Holdings, Inc., Impact Forge Group, Inc., HHI FormTech, LLC, Kyklos Bearing International, Inc. and Cloyes Gear and Products, LLC subsidiaries. With over 2,700 employees, HHI is headquartered in Royal Oak, Michigan and operates 14 manufacturing facilities located in Arkansas, Illinois, Indiana, Michigan and Ohio. For more information, please visit www.hhigroupholdings.com.
About KPS Capital Partners, LP:
KPS Capital Partners, LP is the manager of the KPS Special Situations Funds, a family of private equity funds with over $2.6 billion of committed capital focused on constructive investing in restructurings, turnarounds and other special situations. KPS has created new companies to purchase operating assets out of bankruptcy; established stand-alone entities to operate divested assets; and recapitalized highly leveraged public and private companies. The KPS investment strategy targets companies with strong franchises that are experiencing operating and financial problems. KPS invests its capital concurrently with a turnaround plan predicated on cost reduction, capital investment and capital availability. Typically, the KPS turnaround plan is accompanied by a financial restructuring of the company's liabilities. The KPS investment strategy and portfolio companies are described in detail at the firm's website: www.kpsfund.com.
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