DETROIT - A new suitor for Key Plastics LLC has opened a potential bidding war, with the loser in the battle guaranteed at least $750,000.
The last-minute offer came from the Carlyle Group, a Washington, D.C., investment company with high-profile management including former Secretary of State James Baker III.
Carlyle is bidding against JJM LLC, a New York investment firm headed by Joyce Johnson-Miller.
Johnson-Miller, president and founder of JJM, was in U.S. Bankruptcy Court in Detroit on Monday, Nov. 6, prepared for a hearing that would have made her business the preferred bidder for Key.
Key, of Novi, Mich., filed for Chapter 11 protection in March.
Instead of making JJM the preferred bidder, the court delayed action because of the last-minute offer from Carlyle, which had been one of four companies that had made an earlier list of finalists for the purchase.
On Wednesday, Nov. 8, Judge Steven Rhodes agreed to a compromise: Both JJM and Carlyle will have a chance to look over Key's holdings and submit plans that would make them the preferred bidder for the company.
Representatives for JJM and Carlyle have until Nov. 28 to research the business and make their claims. Key will select its preferred bidder by midnight Dec. 4. That company will have the inside track for an auction of Key's assets set for Dec. 14. The losing company gets $1.25 million as compensation for its expenses.
If Carlyle or JJM drop out voluntarily before Nov. 28, they still get $750,000.
A third bidder still could enter the auction, but it must beat the preferred bidder's bid by at least $1.25 million. And that third bidder also must pay another $1.25 million to compensate the preferred bidder for its costs.
Key molds interior, exterior and under-the-hood components for the auto industry in North America and Europe. It posted an estimated $500 million in sales last year.
It expanded rapidly through a series of acquisitions during the 1990s. The company had nine plants in the United States and Mexico five years ago.
In March, Key listed $353 million in debt and $331 million in assets. It faced a Dec. 31 deadline to negotiate its way out of Chapter 11, either through a sale or restructuring.