A small investment company hopes to purchase controlling interest in the distressed Breed Technologies Inc. - a move that would edge out larger prospective buyers.
Schultze Asset Management LLC of White Plains, N.Y., is attempting to recruit wealthy Detroit automotive investors with a plan to gain control of Breed by paying off some of its largest creditors.
The plan was outlined in a Schultze document obtained by Automotive News.
George Schultze, president of the firm, said his investor syndicate hopes to raise $200 million for Breed, the world's third-largest supplier of airbags and seat belts.
Breed, of Lakeland, Fla., is undergoing Chapter 11 reorganization in U.S. Bankruptcy Court in Delaware.
Schultze is one of a number of potential buyers eyeing the assets of Breed, which last year posted sales of $1.4 billion. Industry giants TRW Inc. and Autoliv Inc. have expressed an interest in acquiring part or all of the company.
Breed's investment bankers requested bids this month; a spokesman declined comment on the company's progress.
Schultze Asset Management is an investor in distressed assets.
In Breed's case, Schultze appears to be operating outside the bidding process by seeking de facto control of Breed from its bankers.
Senior Breed debt holders, who are owed about $685 million, have a lot to say about the disposition of assets in bankruptcy court.
If Schultze were to buy Breed bonds and bank debt at a discount, he could propose a plan of reorganization.
If approved by the bankruptcy court, Schultze could sell Breed's noncore operations to repay remaining creditors and emerge from its court-protected reorganization.
Schultze said he also might buy Breed's bonds and bank debt for the purpose of reselling later at a profit. A Breed spokeswoman said she was unaware of Schultze Asset Management or its plans for the company.
Comerica Bank spokeswoman Kathleen Pitton confirmed that the Detroit bank sometimes introduces wealthy Comerica clients to Schultze. Those clients look for big returns from high-risk turnarounds.