(Reuters) - The sale of auto parts supplier TI Automotive is unraveling after the private equity group Carlyle failed to secure enough debt financing to buy the group, people familiar with the process said.
Buyout group Carlyle was in talks to buy the British-based business but was forced to back away last week after it was unable to raise enough debt to support a deal for the business that has $2.5 billion in sales, two people said.
TI Automotive, which makes fuel tanks as well as braking and powertrain components for cars and trucks, has been exploring a sale of the company since early this year but the process was slowed down by the volatility in the financing markets in recent months, people previously said.
The company could go back to rival private equity bidders Bain Capital and Pamplona Capital Management, but both firms are also likely to struggle to raise financing until credit markets improve, the people added, putting the sale process at a standstill.
TI has estimated annual earnings before interest, tax, depreciation and amortization of around $250 million and was expected to fetch about $1.25 billion.
The sale of TI stands as yet another example of auction processes for large companies running into trouble as fears and uncertainty about sovereign debt in the euro zone curtail bank and investor appetite to lend for deals.
Debt markets seized up over the summer, disrupting the planned sale of some auto parts companies.
TI Automotive is controlled by a diverse group of shareholders, led by hedge funds, who took over the business following a debt-for-equity swap.
The group, led by Chairman and CEO Bill Kozyra, hired Deutsche Bank and Lazard to explore strategic alternatives for the company, including a sale or initial public offering.
Founded in 1919 as Tube Investments in Britain, it was renamed TI Automotive when Britain's Smiths Group divested its newly acquired automotive business in 2000. TI has about 16,500 employees and has presence in 28 countries.
Carlyle and TI Automotive were not immediately available for comment.