The inability of Collins & Aikman of Troy, Mich., to finance the $1.3 billion deal has held up efforts to conclude the deal, Textron CEO Lewis Campbell told Wall Street analysts during his third-quarter earnings announcement Thursday, Oct. 18.
"What's holding things up is Collins & Aikman's ability to obtain financing, and we are working closely with them to find a way to make this transaction occur," Campbell said from his Providence, R.I., headquarters.
A deal was reached in early August, but the Sept. 11 terrorist attacks roiled financial markets. A large loan syndication and high yield bond offering had been assembled to leverage the planned $1.3 billion buyout by financier David Stockman. His Heartland Industrial Partners of Greenwich, Conn., has a 60 percent stake in Collins & Aikman.
Since then, uncertainties about automotive production also may have affected the Textron group's cash flow and valuation. That could prompt Heartland to seek a lower purchase price, says an investment banker who has done similar deals.
Dan Tredwell, Heartland senior managing partner, said the firm continues to pursue financing. Heartland plans to use Textron's instrument panel and trim business to give Collins & Aikman the size, customer base and reach to become a major supplier to Tier 1 companies. Collins & Aikman is a supplier of automotive interior systems, including textile and plastic trim, acoustics and convertible top systems. It ranks No. 28 on Automotive News' list of global suppliers for 2000.
Textron's automotive group profits fell 60 percent to 16 million from the year ago period. Sales during the same period fell 11.5 percent to $579. Campbell says he is cautiously optimistic that the deal can be concluded this year. "Obviously, we have a motivated buyer and motivated seller."