Mergers, acquisitions, entries and exits
KPS Capital to acquire all assets of Briggs and Stratton
By KPS Capital
By KPS Capital
KPS Capital Partners has announced that, through a newly formed affiliate, it has entered into an asset purchase agreement with Briggs and Stratton Corporation and certain of its wholly-owned subsidiaries under which KPS will acquire substantially all of the assets of Briggs and Stratton, including equity of foreign subsidiaries, for approximately $550 million.
Briggs and Stratton has filed a motion with the United States Bankruptcy Court for the Eastern District of Missouri seeking the designation of KPS as the stalking horse bidder in a sale motion as part of the Company’s filing of voluntary petitions under Chapter 11 of the Bankruptcy Code today. Briggs and Stratton expects to sell its assets through a court-supervised sale process under Section 363 of the Bankruptcy Code.
KPS, through an affiliate, has also agreed to invest $265 million in a FILO tranche of Briggs and Stratton’s Debtor in Possession (“DIP”) financing to support the Company’s operations. Upon the entry of a final order approving the DIP facility, KPS will have the right to “credit bid” its $265 million participation in the DIP financing in connection with the proposed acquisition of Briggs and Stratton. Following court approval, the DIP facility will ensure that Briggs and Stratton has sufficient liquidity to continue normal operations and continue to meet its financial obligations during the Chapter 11 process, including the timely payment of employee wages and benefits, continued servicing of customer orders and shipments, and other obligations.
KPS also announced that it has entered into an agreement in principle with the United Steelworkers of America (the “USW”) with respect to a new collective bargaining agreement (“CBA”) for Briggs and Stratton hourly employees represented by the union at the Company’s manufacturing facilities in Wisconsin. The new CBA, an exclusive agreement between KPS and the USW, will become effective upon completion of the acquisition.
Further, Wells Fargo has agreed to continue to provide floorplan financing to support Briggs and Stratton’s customers under KPS’ ownership, and a syndicate of banks including Wells Fargo, Bank of America, BMO Harris Bank and PNC Business Credit has committed to provide exit financing to Briggs and Stratton. The financings are subject to completion of the acquisition and customary closing conditions.
Michael Psaros, Co-Founder and Co-Managing Partner of KPS, said, “We are very excited to acquire Briggs and Stratton, a legendary brand in American manufacturing and the leading company in its industry. Briggs and Stratton enjoys a leading market position, scale, a global manufacturing footprint, world-class design and engineering capabilities, and a portfolio of industry-leading products sold under iconic brand names. We intend to capitalize on the Company’s many attractive growth opportunities and to support its already substantial investment in research and development, technology and new product development. KPS intends to grow the new Briggs and Stratton aggressively through strategic acquisitions.
“KPS is committed to the expeditious acquisition of Briggs and Stratton to provide certainty of outcome and confidence in the new Company’s future for all of its stakeholders, including customers, employees and suppliers. The Company and its stakeholders will benefit from KPS’ demonstrated commitment to manufacturing excellence, continuous improvement, global network, access to capital and significant financial resources. The new Briggs and Stratton will be conservatively capitalized and not encumbered by its predecessor’s significant liabilities.
“We thank the United Steelworkers of America for its support of our acquisition of the Company. “We have expended an enormous amount of effort, resources and capital on this process to date. We are confident that all of the conditions necessary to create a new thriving going concern enterprise are in place,” Mr. Psaros concluded.
Kirkland and Ellis is acting as legal counsel to KPS with respect to the transaction.