HHI Group Holdings, a maker of forged parts for power train and wheel-end applications, has raised $300 million in new financing for a recapitalization. The deal includes a $100 million revolving credit facility and a $200 million term loan. Proceeds will be used to refinance existing debt and to fund a $150 million distribution to shareholders like KPS Capital Partners and MC Capital.
KPS Capital Partners, LP (“KPS”) announced today that its portfolio company HHI Group Holdings, LLC (“HHI”) has completed a successful recapitalization. HHI raised $300 million of new financing, including a $100 million committed but undrawn asset- based revolving credit facility and a $200 million term loan. 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.
Following the recapitalization, HHI remains conservatively capitalized with the continued support of KPS, its majority shareholder, a private equity firm with over $2.6 billion of committed capital. KPS and minority shareholders including MC Capital Inc., a subsidiary of Mitsubishi Corp., and HHI management continue to own 100% of HHI’s common stock.
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 $100 million asset based revolving credit facility, and Bank of America Merrill Lynch and Credit Suisse acting as Joint Lead Arrangers on the $200 million term loan.
Jenner & Block LLP and Proskauer Rose LLP served as legal counsel to HHI with respect to the recapitalization.
About HHI Group Holdings, LLC
HHI Group Holdings 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 2,600 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.