Collins & Aikman of Troy, Mich., soon will try to sell a $325 million bond offering for part of the money needed to close the deal this year, company spokesman David Youngman said. The terrorist attacks roiled financial markets and halted an earlier financing effort, sending both groups back to the negotiating table.
Heartland Industrial Partners, which owns 60 percent of Collins & Aikman, then renegotiated the price for the Textron Automotive Inc. trim unit to $1.28 billion from $1.34 billion. The new price “reflects current conditions and reduced valuations in the industry,’’ Youngman said.
Textron spokeswoman Susan Tardanico said the revised terms reflect the spirit that “we would work together with Collins & Aikman to come up with creative ways to ensure that the deal will proceed to a successful conclusion.’’
Less cash up frontThe revised agreement includes $735 million in cash and assumed debt; $326 million in preferred stock; $18 million in common shares at $5 each, or $90 million; and as much as $125 million payable in 2007 based on Collins & Aikman’s earnings before interest, taxes and depreciation and amortization in the next five years, according to a Collins & Aikman statement.
The deal will give Collins & Aikman $4 billion in revenue if it closes.
In the original deal announced in August, Textron said it would receive $1 billion in cash and assumed debt, $245 million in preferred stock and the $90 million in common shares.
The Textron unit makes plastic door moldings, consoles and armrests and instrument panels. The unit had $1.87 billion in sales last year.
That business is expected to enhance Collins & Aikman’s efforts to create a Tier 2 supplier of interior parts and systems to Tier 1 suppliers.
Smaller auto exposureIt will allow Textron, a Providence, R.I., conglomerate, an opportunity to reduce its dependence on the auto industry.
Textron’s automotive segment will decline to about 9 percent of the company’s total annual revenues. The company also produces Bell helicopters and Cessna aircraft.
The new agreement requires Textron to retain equipment related to the auto-trim business, with a value of about $87 million, and lease it to Collins & Aikman. Textron will further retain a 50 percent stake in Textron Automotive Italia Srl, an Italian company. It may be sold to Collins & Aikman after three years for an estimated $23 million.
Textron plans to use the proceeds to buy its own stock and reduce debt by $700 million.