Forging group FormTech Industries LLC declared itself bankrupt and agreed to sell its assets to Hephaestus Holdings Inc. (HHI), which is the parent company of several rival forgers. The restructuring and sale of FormTech is expected to be completed by mid-October.
"During the past several months, we have taken extensive steps to address the realities of the current automotive marketplace,” explained FormTech president Chris Jones. “While we have made significant progress it became apparent that the best path for FormTech, our employees, customers and vendors is a court-supervised restructuring and going concern sale. This process will ensure that customers are supplied in a full and timely manner.”
The pre-agreed restructuring program calls for FormTech to be acquired by a new subsidiary of HHI. Prior to the Chapter 11 filing an affiliate of HHI acquired voting control of FormTech's senior secured debt, and HHI and FormTech agreed to the “going concern” sale with FormTech's first- and second-lien debtholders.
Also, a HHI affiliate will supply debtor-in-possession financing for FormTech, to support ongoing operations.
FormTech produces crankshafts and other drivetrain components for automotive light vehicle and heavy truck markets at forging operations in Royal Oak, MI, and Tonawanda, NY. It also supplies other industrial markets in North America. The company was formed in 2006 by investors who acquired the forging operations spun off from Metaldyne Corp.
HHI is a holding company owned by KPS Capital Partners LP and MC Capital Inc., a subsidiary of Mitsubishi Corp. Its forging operations include Jernberg Holdings Inc., Impact Forge Group Inc., and Kyklos Bearing International Inc.
The group recently emerged as the stalking-horse bidder in the Chapter 11 reorganization of Metaldyne Corp.’s Powertrain Group, though the assets were sold to a different buyer.
HHI’s eight current operations produce forged parts and wheel bearings for North American automakers.
"We believe that FormTech's assets have a great future under HHI,” Jones stated. “The combination with a strategic buyer that is the leading company in the North American forging industry will lead to significant synergies."
FormTech Files for Chapter 11, Agrees to Asset Sale
Rival HHI to finance, consolidate automotive forger