Holding Company Acquires Impact Forge, Omni Forge

Claims acquisition creates North America's largest independent manufacturer of highly engineered automotive forgings

KPS Special Situations Funds (KPS) has announced that its portfolio company, Hephaestus Holdings, Inc. (HHI), has acquired the assets and business of Impact Forge, Inc., Impact Precision Forge, Inc., Omni Forge, Inc. and related entities (collectively Impact Forge) through a newly formed subsidiary, Impact Forge Group, Inc. Financial terms of the transaction were not disclosed.

Impact Forge is a leading manufacturer of highly engineered symmetrical and asymmetrical forged parts for transmission, driveline and wheel-end applications. Employing over 500 employees, Impact Forge operates four manufacturing facilities around Indianapolis and Coldwater, MI.

Through its Jernberg Holdings, Inc., HHI already was the parent company of Chicago-based Jernberg Industries, Inc., one of North America’s leading manufacturers of highly engineered forged parts for various power-train and wheel-end applications in the automotive industry. Products manufactured by Jernberg include wheel hubs, transmission turbine hubs, and axle ring and pinion gears. With over 800 employees, Jernberg operates four manufacturing facilities located in Chicago.

KPS Special Situations Fund II created Hephaestus Holdings as a new company to purchase certain assets of Jernberg Industries Inc., Iron Mountain Industries, LLC, and related entities pursuant to a 363 sale of assets under a Chapter 11 bankruptcy proceeding.

Michael Psaros, managing principal of KPS, said, KPS created HHI in September 2005 to consolidate the North American automotive forging industry behind the leadership of George Thanopoulos and his management team. “Through the acquisitions of Jernberg, Impact and Omni, we have quickly created the largest independent automotive forging company in North America,” he claimed.“HHI is now a superbly managed, profitable, conservatively capitalized company which is unencumbered by legacy liabilities confronting other automotive parts suppliers. We are confident that HHI will continue its aggressive growth trajectory, both organically and through further acquisitions."

Thanopoulos, CEO of HHI, said, "The acquisition of Impact Forge, and Omni Forge is a critical step in the growth of HHI. We are very impressed with Impact's and Omni's growth, profitability, customer base, and technical capabilities. HHI is now uniquely positioned to offer our customers products manufactured through a wide range of technologies, including cold, warm, and hot forgings, wedge rolling, ring-rolling, hydraulic upsetting, and hammer presses. The acquisition diversifies our automotive customer base and introduces HHI as a competitor in the heavy truck, mining, and industrial forgings market."

"Our progress in only ten months has been remarkable, and our future is very bright," Thanopoulos continued. "First and foremost, we are grateful to our customers, employees and suppliers for their loyal support of HHI's businesses. We also thank KPS for creating HHI, assembling our management team and sponsoring our turnaround plan. It is a pleasure to partner with owners who understand that the key to creating real value is executing on the shop floor every day."

Financing for the transaction was provided by LaSalle Business Credit, NA. The KPS investment strategy and portfolio companies are described in detail at the firm's website: www.kpsfund.com.

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