Successful Turnaround Through Bankruptcy Process Drives Value
Sun Capital Partners, Inc. (“Sun Capital”), a leading private investment firm specializing in leveraged buyouts and investments in market-leading companies, today announced the signing of a definitive agreement to sell its affiliated portfolio company Fluid Routing Solutions (“FRS” or “the Company”), a designer and manufacturer of fuel management systems and hose extrusion products for major automotive and industrial OEMs. FRS will be purchased by Park-Ohio Industries, Inc., a subsidiary of Park-Ohio Holdings Corp. (NASDAQ: PKOH). The transaction is expected to close by March 30, 2012.
Headquartered in Southfield, MI, FRS sells to automotive and industrial customers in North America, Europe and Asia. FRS was initially acquired by a Sun Capital affiliate in 2007 in a corporate carve-out transaction. At the time of acquisition, FRS had negative cash flow and double-digit EBITDA losses. Despite significant improvements in working capital and right-sizing the cost structure, economic headwinds impacting the entire automotive industry hindered further progress. In March 2009, FRS entered a voluntary bankruptcy process in which an affiliate of Sun Capital provided the debtor-in-possession financing, worked very closely with customers and suppliers to ensure stability and continuity, and reacquired the business through a 363 bankruptcy sale process.
Restructuring efforts at FRS continued, achieving major gains in production and engineering efficiency, the consolidation of various manufacturing facilities, and focused cost-reduction initiatives across the business. As demand in the automotive sector recovered, revenues have increased, resulting in corresponding improvements in EBITDA.
“By carrying out a top-to-bottom restructuring, leaving behind unprofitable business lines and focusing on the viable parts of the business, FRS was well positioned to make gains when the auto industry rebounded,” said Marc Leder, Co-CEO at Sun Capital Partners.
Affiliates of Sun Capital and FRS leveraged the expertise of investment bankers Cliff Roesler and Kevin Marsh of Angle Advisors, whose trusted relationships and deep industry knowledge facilitated a successful sale process. Kirkland and Ellis provided legal advice.
Successful turnarounds and company sales concluded recently by Sun Capital Partners affiliates include Raybestos Powertrain LLC, a leading manufacturer and supplier of transmission-related products, Del Monte Canada, the market leader in packaged fruit and tomatoes in Canada, and ThermaSys Corporation, a leading manufacturer of highly engineered copper, brass and aluminum heat exchanger components and assemblies.
Sun Capital has deep experience in the automotive industry; current affiliated portfolio companies in the sector include Kraco Enterprises, a manufacturer and distributor of automotive aftermarket floor mats, including cargo floor mats for vehicle use; NFP Steering DriveSol, a Brazilian designer and manufacturer of steering columns and assembly components for automobile manufacturers; Vari-Form, a producer and marketer of hydroform intensive body structural products for North American automakers; and Wabash Technologies, a designer and manufacturer of sensor and actuator products for the automotive, heavy-duty truck and off-highway sectors.
About Sun Capital Partners, Inc.
Sun Capital Partners, Inc. is a leading private investment firm focused on leveraged buyouts, equity, debt, and other investments in companies that can benefit from its in–house operating professionals and experience. Sun Capital affiliates have invested in more than 290 companies worldwide with combined sales in excess of $45 billion since Sun Capital’s inception in 1995. Sun Capital has offices in Boca Raton, Los Angeles, and New York, as well as affiliates in London, Paris, Frankfurt, Luxembourg, Shanghai and Shenzhen. For more information, please visit www.SunCapPart.com.
About Fluid Routing Solutions
FRS is a leading designer and manufacturer of innovative, highly-engineered fuel management systems and hose extrusion products for major OEMs in the automotive and industrial sectors. Its products include fuel filler, hydraulic and thermoplastic assemblies and several forms of manufactured hose, including bulk and formed fuel, power steering, transmission oil cooling, hydraulic and thermoplastic hose. FRS operates production facilities in Florida, Michigan, Ohio, Tennessee and the Czech Republic.