DETROIT -- Lynn Tilton, who favors wearing diamonds and buying diamonds in the rough, is charging into the auto industry -- at a time when most of her private-equity predecessors are happy to be out.
David Stockman's Heartland Industrial Partners' automotive acquisitions failed. So did Stephen Feinberg's Cerberus Capital Management's buyout of Chrysler. Several of Tony Johnson's Hidden Creek Industries' roll-ups ended in bankruptcy, including Dura Automotive Systems Inc.
Now Dura is the crown jewel of an automotive portfolio being assembled by Tilton, CEO of Patriarch Partners of New York. Her portfolio represents the latest large-scale private-equity foray into automotive markets, where prices appear cheap. But as the others learned, price volatility can burn.
Tilton told Automotive News she's willing to take risks that have staggered rival investors because "we're value investors. We go where no one else is walking. In order to be involved in the changing industry, you need to be there during the most difficult times."
Tilton has agreed to invest up to $125 million, assume most of Dura's debt and take a controlling stake in the maker of shifter, cable, structural and safety systems, plus glass and exterior trim. Dura emerged from Chapter 11 reorganization in June 2008, just before the auto market collapsed.
Tilton plans to combine Dura with her Global Automotive Systems, which operates seven parts makers. The new company, which will keep the Dura name, is expected to have sales of about $2 billion.
"Additional acquisitions are not necessary to make Dura successful," she said, but other opportunities will be looked at.