Hart puts US car-part maker into bankruptcy
UCI International, the U.S. auto-parts maker owned by New Zealand's richest man, billionaire Graeme Hart, has filed for bankruptcy after losing one of its biggest customers to competitors in China.
Units of UCI make pumps and filters for carmakers including Ford and General Motors, and until last year had sold many aftermarket parts through retailers AutoZone Inc. and Advance Auto Parts. The company also has private-label deals to make products for brands including Napa, STP and Motorcraft.
Lake Forest, Illinois-based UCI has 1,800 employees in the United States. Its assets total about US$435 million and liabilities run to about $717 million, including $400 million in unsecured bonds, according to filings in Delaware bankruptcy court.
Brian Whittman of turnaround adviser Alvarez & Marsal, who was brought in to act as UCI's chief restructuring officer, called the balance sheet "unsustainable."
GM, AutoZone and Advance had represented the UCI companies' biggest revenue sources, he said. But the retailers last year switched suppliers, with Advance turning to a manufacturer in China. On top of that, UCI's ASC unit lost a bid to provide water pumps for GM's "Gen V+" vehicles.
To weather these setbacks, UCI reorganised operations, Whittman said. In February, he said, the company also appointed an independent director to help negotiate with creditors and other stakeholders, to no avail.
"In late May, it became clear to the debtors that their key constituencies would be unable to reach agreement on the terms of a consensual, out-of-court restructuring," Whittman said. The company has received a new offer from a group of noteholders and will continue negotiating while in bankruptcy, he said.
Hart became the indirect owner of UCI after a 2011 acquisition by his firm, Auckland-based Rank Group Ltd. He's listed at 180 on the Bloomberg Billionaires Index, with a net worth of US$6.9 billion, - $10.1b - making him the wealthiest person in New Zealand.