U.S. outdoor power equipment maker Briggs + Stratton has locked in a stalking-horse buyer for its assets as it seeks a court-supervised reorganization.
The Milwaukee-based company announced Monday it has a stock and asset purchase agreement in place with New York private equity firm KPS Capital Partners, best known as an investor in manufacturing companies.
The agreement calls for KPS to act as the stalking-horse bidder. The term refers to a party that makes an initial bid on the assets of a company in bankruptcy or creditor protection — effectively setting the minimum bid while allowing other potential buyers an opportunity to make higher or better bids.
To “address its debt obligations” in the meantime, Briggs + Stratton said it has filed petitions for a “court-supervised voluntary reorganization” under Chapter 11 of the U.S. Bankruptcy Code.
The company said it has also locked in $677.5 million in debtor-in-possession (DIP) financing, with $265 million coming from KPS and $412.5 million from its other asset-based lenders (all figures US$).
Briggs + Stratton has been in “business optimization” mode since 2018. The company has more recently run up against obstacles such as the bankruptcy of the Sears retail chain and “a difficult housing market driven by the lack of affordable single-family homes in the U.S.,” in turn affecting sales of residential products such as lawn mowers.
“The challenges we have faced during the COVID-19 pandemic have made reorganization the difficult but necessary and appropriate path forward to secure our business,” Briggs + Stratton CEO Todd Teske said in the company’s release Monday.
“It also gives us support to execute on our strategic plans to bring greater value to our customers and channel partners.”
Briggs + Stratton, whose international operations include a Canadian office and distribution centre in Mississauga, Ont., sells portable generators, snow blowers and pressure washers in the Canadian market. Its U.S. product lines also include small engines, lawn mowers, air compressors and air tools.
The reorganization filing announced Monday does not include any of Briggs + Stratton’s international subsidiaries, the company said, but added its non-U.S. entities are part of the proposed sale agreement.
During the reorganization process, it said, its products “will continue to be produced, distributed, sold and fully backed by our dedicated team.” — Glacier FarmMedia Network