TRAVERSE CITY, Mich. -- Shiloh Industries Inc. acquired Revstone Transportation LLC subsidiary Contech Castings LLC for $54.4 million.
The transaction closed on Aug. 2.
The acquisition of Contech provides Shiloh, which operates a technical center in Canton, Mich., with plants in Alma, Mich.; Clarksville, Ohio; Auburn, Ind.; and Pierceton, Ind., as well as new contracts with Ford Motor Co., General Motors Co., Chrysler Group LLC and Nexteer Automotive Inc., CEO Ramzi Hermiz said at the CAR Management Briefing Seminars here today.
Valley City, Ohio-based Shiloh gains capacity, which is constrained in the stamping and die-casting supply base, Hermiz said. The added capacity in Tennessee allows Shiloh to expand with Volkswagen AG and other automaker plants in the South.
"This expands our geographical footprint and gives us more capacity in the South, allowing us to increase our customer base," Hermiz said.
Shiloh expects to invest "several million dollars" into each plant, Hermiz said.
"We understand that these plants will need investment to make them viable," He said. "Contech was in a difficult situation and a lot investment wasn't made (into the plants), but the plants were being operated well with key customers."
Contech, based in suburban Detroit, employs 300, adding to Shiloh's 1,800 employees worldwide.
Shiloh, with revenue of $700 million, was the stalking horse bidder for Contech, which is tied to the bankrupt supplier empire of industrialist George Hofmeister.
Revstone Industries, the former parent of Revstone Transportation and Contech, filed Chapter 11 bankruptcy on Dec. 3, 2012, after a Grand Traverse County 13th Circuit Court judge ordered the company to pay nearly $27 million owed to its largest creditor, Clearwater, Fla.-based Boston Finance Group LLC.
Hofmeister, and his legal team, were able to keep Contech out of the bankruptcy and placed them under non-bankrupt Revstone Transportation. Creditors in the Revstone Industries case accuse Hofmeister of shuffling assets from company to company and through several trusts to avoid pay debts.
Revstone's other bankrupt assets include U.S. Tool and Engineering LLC, Greenwood Forgings LLC and Spara LLC, and Metavation LLC, which is tied to a pension fund scandal. Hofmeister is also under investigation by the U.S. Department of Justice and Department of Labor.
Hermiz said Shiloh presented its acquisition to the bankruptcy judge and, as part of the agreement, is protected against any liens and pension liabilities tied to Contech. However, Shiloh has put funds into escrow in the event of any legal disputes, Hermiz said.