Hephaestus Completes Delphi Bearings Buy

Delphi has completed the sale of its North American bearings business to a unit of Hephaestus Holdings Inc., a maker of forged parts for the North American automotive industry. Hephaestus is a portfolio company of KPS Capital Partners.

PRESS RELEASE

KPS Capital Partners, LP (“KPS”) today announced that its portfolio company Hephaestus Holdings, Inc. (“HHI”), through its indirect, wholly-owned subsidiary Kyklos Bearing International, Inc. (“KBI”), has completed the acquisition of substantially all the non-cash assets primarily used in the North American Bearings Business of Delphi Corporation (the “Bearings Business”).  KBI acquired the Bearings Business free and clear of substantially all liens, claims, encumbrances, and interests through an auction conducted as part of a sale process under Section 363 of the United States Bankruptcy Code.  The U.S. Bankruptcy Court for the Southern District of New York approved the transaction on March 19, 2008.
HHI is the leading independent manufacturer of forged parts for the North American automotive industry. 

The Bearings Business is the leading producer of Gen III wheel bearings in North America and the primary supplier of this product to General Motors Corporation in North America.  The Bearings Business, including the New Departure Hyatt brand, invented the current Gen III wheel bearing technology and has maintained its industry leading technological advantage.  It enjoys a proven track record for the industry's lowest warranty rates and highest quality standards.

KBI acquired substantially all of the Bearings Business's inventory, intellectual property, and machinery and equipment, including the manufacturing and engineering facility located in Sandusky, Ohio.  KBI has also hired substantially all of the Bearings Business's employees and has assumed all of the customer and supplier contracts.

Michael G. Psaros, a Managing Partner of KPS, said: “We are delighted with HHI's profitable growth under George Thanopoulos's leadership and look forward to supporting the company as it proceeds with its aggressive growth and industry consolidation strategies.  HHI has now completed three successful acquisitions since its creation by KPS in September 2005, and the company has also achieved significant organic growth and customer diversification.  HHI is well capitalized, with access to significant additional capital, and we welcome inquiries from potential sellers of forging businesses, assets or products lines that contain large forging value content.”

George Thanopoulos, Chief Executive Officer of HHI, said, “I am thrilled with the success and rapid growth of HHI since its creation. HHI was formed to consolidate the North American forging industry and to expand into products and markets where our forging and metalworking expertise result in immediate synergy and value creation.  We are very excited to expand into the wheel bearings business, and we look forward to becoming a significant global competitor in the industry.”


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 $1.8 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.


About Hephaestus Holdings, Inc.
Hephaestus Holdings, Inc. (“HHI”), through its Jernberg Holdings, Inc., Impact Forge Group, Inc. and Kyklos Bearing International, Inc. (“KBI”) subsidiaries, is the largest independent manufacturer of forged parts and a leading manufacturer of wheel bearings for the North American automotive industry. Jernberg Holdings, Inc. and Impact Forge Group, Inc., through their respective subsidiaries, manufacturer highly engineered symmetrical and asymmetrical forged parts for various power train and wheel-end applications. KBI is the leading producer of Gen III wheel bearings in North America.  HHI is owned by KPS Capital Partners, LP and MC Capital Inc., a subsidiary of Mitsubishi Corp. Employing nearly 2,000 employees, HHI operates eight manufacturing facilities located in the Chicago, Illinois; Indianapolis, Indiana; Coldwater, Michigan; and Sandusky, Ohio vicinities.  For more information, please visit www.hhiforge.com.