TI Automotive plans debt-fueled dividend for hedge fund owners, report says

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NEW YORK (Bloomberg) -- TI Automotive’s hedge fund owners that include Oaktree Capital Group LLC will reap a $435 million dividend by saddling the longtime auto supplier with more debt for the second time in two years.

JPMorgan Chase & Co. is arranging a $1.25 billion loan that will be used to fund the payout and refinance TI’s debt, three people with knowledge of the payout told Bloomberg. The bank began soliciting other lenders to join in the debt this past week, said the people, who asked not to be identified as the discussions are private. 

The decision to seek a dividend comes after TI’s owners’ plans to sell the company to potential buyers that included private-equity firms Bain Capital Partners LLC and Pamplona Capital Management LLP, failed to materialize. The payout will boost TI’s debt levels to 3.5 times earnings before interest, taxes, depreciation and amortization from 2.4, said one of the people.

Carissa Felger, a spokeswoman at Sard Verbinnen & Co. for Oaktree, and Tasha Pelio, a JPMorgan spokeswoman, declined to comment.

The company has raised debt for a dividend before. TI obtained a $550 million loan in March 2012 for a payout, according to data compiled by Bloomberg.

TI, which makes a variety of fluid storage and fuel line components for cars and trucks, was acquired by a group of funds led by Oaktree and Duquesne Capital Management LLC in a 2007 debt restructuring. TI, which once supplied fuel lines to Ford Motor Co.’s Model T, traces its roots to 1919.

The company, based in suburban Detroit, ranks No. 63 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $3.2 billion in 2013. 

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