MiddleGround’s Grouper to buy Shiloh assets for $218m

Grouper Holdings LLC, a subsidiary of MiddleGround Capital LLC, has agreed to acquire Shiloh Industries' assets in a stalking horse stock and asset purchase deal for $218 million.

Grouper Holdings LLC, a subsidiary of MiddleGround Capital LLC, has agreed to acquire Shiloh Industries’ assets in a stalking horse stock and asset purchase deal for $218 million. To facilitate the transaction, Shiloh has filed for voluntary chapter 11 petitions. Shiloh is a solutions provider focusing on technologies that provide environmental and safety benefits to the mobility market

PRESS RELEASE

Shiloh Industries, Inc. (NASDAQ: SHLO) (the “Company” or “Shiloh”) an environmentally focused global supplier of lightweighting, noise and vibration solutions, announced today that it has entered into a stalking horse stock and asset purchase agreement with Grouper Holdings, LLC (“Grouper”), a subsidiary of MiddleGround Capital LLC (“MiddleGround”) pursuant to which Grouper will acquire substantially all of the Company’s assets, including the equity interests of certain of the Company’s direct and indirect subsidiaries for an aggregate consideration of $218 million in cash, subject to working capital and net debt adjustments, and assumption of certain liabilities of the Company.

To facilitate the transaction process, the Company and certain of its U.S. subsidiaries today filed voluntary petitions (the “Bankruptcy Petitions,” and the cases commenced thereby, the “Chapter 11 Cases”) for reorganization under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. MiddleGround, via Grouper, will serve as the “stalking horse bidder” in a court-supervised auction and sale process. Accordingly, the proposed transaction with MiddleGround is subject to higher or otherwise better offers, Court approval and other customary conditions. The Company’s operating entities outside the U.S., while included in the agreement with MiddleGround, are not part of the court-supervised process, and its operations in Asia, Europe and Mexico are expected to continue as normal.

The Company’s operations will continue throughout the sale process and the Company will continue to meet customers’ needs. In conjunction with the proposed sale transaction, the Company has received a commitment for $123.5 million in debtor-in-possession (“DIP”) financing from its existing lenders, consisting of approximately $23.5 million new money subfacility and a roll-up of approximately $100 million of commitments under the Company’s existing revolving credit facility. Upon Court approval, this new financing, combined with cash generated from the Company’s ongoing operations, is expected to be used to support the business throughout the sale process as Shiloh continues to take steps to address the ongoing challenges related to OEM production shutdowns due to COVID-19 that have affected the automotive sector in recent months.

“MiddleGround’s interest in Shiloh is a testament to the value they see in the highly competitive and universally innovative solutions we provide to our customers, driven by our hardworking, dedicated team,” said Cloyd J. Abruzzo, Interim chief executive officer of Shiloh. “The decision to enter this agreement with MiddleGround follows a thorough review of the options available to us, and we believe this transaction is the best path forward for Shiloh and all of our stakeholders. We look forward to building on our unique strengths as part of MiddleGround, while improving Shiloh’s financial position for the long term. In the meantime, we continue to work to promote safety and meet customer demand as the automotive industry recovers from the COVID-19 pandemic. We appreciate the support of our customers, partners, and above all, our employees as we take these important steps to position Shiloh for the future.”

“Shiloh has a unique and attractive portfolio of innovative, lightweighting products and technologies that enable OEMs to reduce on-vehicle weight without compromising strength, safety or performance,” said John Stewart, Partner at MiddleGround. “Despite recent market conditions, we see tremendous value in Shiloh’s business and differentiated product solutions serving the automotive sector. We look forward to working with the Shiloh team in this new chapter for the Company.”

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In conjunction with the Chapter 11 filing, the Company has filed a number of customary motions with the Court seeking authorization to continue to support its operations during the court-supervised sale process, including authority to continue payment of employee wages and benefits without interruption and to honor customer commitments.

Additional information is available on Shiloh’s restructuring website at www.shilohrestructuring.com, or by calling Shiloh’s Restructuring Hotline at (877) 462-4380 (toll-free in the U.S. and Canada) or (347) 817-4091 (for calls originating outside the U.S. and Canada). Court documents and additional information about the court-supervised process are available on a separate website administered by Shiloh’s claims agent, Prime Clerk, at https://cases.primeclerk.com/shiloh.

The Company cautions that trading in its securities during the pendency of the Chapter 11 Cases is highly speculative and poses substantial risks. Trading prices for these securities may bear little or no relationship to the actual recovery, if any, by the holders in the Chapter 11 Cases. The Company expects that its stockholders could experience a significant or complete loss on their investment, depending on the outcome of the Chapter 11 Cases.
Jones Day is serving as legal counsel to Shiloh, Houlihan Lokey Capital Inc. is serving as financial advisor, and Ernst & Young LLP is serving as restructuring advisor. Baker McKenzie LLP is serving as legal counsel to MiddleGround.

About Shiloh Industries, Inc.
Shiloh Industries, Inc. (NASDAQ: SHLO) is a global innovative solutions provider focusing on lightweighting technologies that provide environmental and safety benefits to the mobility market. Shiloh designs and manufactures products within body structure, chassis and propulsion systems. Shiloh’s multicomponent, multi-material solutions are comprised of a variety of alloys in aluminum, magnesium and steel grades, along with its proprietary line of noise and vibration reducing ShilohCore® acoustic laminate products. The strategic BlankLight®, CastLight® and StampLight® brands combine to maximize lightweighting solutions without compromising safety or performance. Shiloh has approximately 3,450 dedicated employees with operations, sales and technical centers throughout Asia, Europe and North America.

About MiddleGround Capital
MiddleGround Capital is a private equity firm that makes control equity investments in lower middle market North American companies in the B2B industrial and specialty distribution sectors. MiddleGround works with its portfolio companies to create value through a hands-on operational approach and partners with its management teams to support long-term growth strategies. MiddleGround is currently investing out of its first fund and headquartered in Lexington, KY with a second office in New York City. For further information, please visit: www.middlegroundcapital.com.