Sun Capital in $70m autoparts deal

The turnaround firm purchased a larger stake in Accuride, a US autoparts maker and former KKR portfolio company, in a $70m transaction through the company’s senior secured term loan.

Sun Capital Partners has bought a larger position in autoparts company Accuride with the $70 million purchase and modification of the company’s senior secured term loan.

The Florida-based turnaround specialist will also receive a warrant for 25 percent of Accuride’s common stock, and was granted the ability to elect five directors and nominate one independent director on Accuride’s board.

Sun's hedge fund, Sun Capital Securities Fund, bought a 10 percent stake in the company last year, a spokesman for the firm said in an interview.

Kohlberg Kravis Roberts, which bought the company in 1997, took Accuride public and exited its investment in 2007.

Accuride, like the autoparts makers across the US, has struggled in the economic downturn as the nation’s big three automakers, General Motors, Ford and Chrysler, go through almost perpetual restructurings and, in GM's and Chrysler's cases, rely on government money to keep them afloat.

The company reported a fourth quarter loss of $125.8 million, compared to a loss of $10.4 million in the fourth quarter of 2007. Net sales for the quarter were $208.8 million, down from $222.5 million in the prior year’s quarter.

Accuride is included on Moody’s Investors Service “bottom rung” list of the 283 US companies at highest risk of default that was released earlier this week.

Earlier this month, the company’s chief financial officer David Armstrong resigned after more than a decade with the company for a three-year overseas stint with The Church of Jesus Christ of Latter-day Saints in Lima, Peru.

Accuride, headquartered in Evansville, Indiana, makes commercial vehicle parts and has $950 million of revenues. Accuride’s products include commercial vehicle wheels, wheel-end components and assemblies, truck body and chassis parts, seating assemblies and other commercial vehicle components.

Sun Capital has other autoparts suppliers in its portfolio, including Wabash Technologies; ThermaSys; Vari-Form; Powertrain Products; Mark IV Industries; Kraco Enterprises and Fluid Routing Solutions.

Sun has used a debt for control strategy in the past. The firm bought positions in its portfolio companies Souper Salad, Berkline Benchcraft and Bruegger's through debt, the spokesman said. The firm's hedge fund bought the positions in Souper Salad and Berkline, while the buyout fund transacted the Bruegger's deal, he said.