Private equity firm Cerberus Capital Management bought the assets of the bankrupt frame-builder Tower Automotive for roughly $1 billion to add to its automotive holdings. The purchase allowed Tower to emerge from bankruptcy protection and at the time about 70% or so of its client base was from outside Detroit automakers.
Tower’s products are manufactured at 30 production facilities strategically located near its customers in North America, South America, Europe and Asia. It also has nine engineering and sales locations throughout the world.
The use of funds is to retire indebtedness, for working capital, and for general corporate purposes.
The company claims that from January 1, 2008 through December 31, 2009, it achieved $195 million in manufacturing and purchasing cost reductions through implementation of Lean Six Sigma principles and rigorous application of global best practices. Those cuts allowed it to have a 7.6% Adjusted EBITDA margin in 2009, a challenging environment in the automotive industry. For the year ended December 31, 2009, Tower’s revenues were $1.6 billion, Adjusted EBITDA was $125 million and its net loss attributable was $67.9 million.
The market gets to absorb yet one more private equity-backed portfolio company. Can’t you just hear the excitement?
JON C. OGG
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