First Brands Mulls Restructuring Options Including Bankruptcy
Auto Parts Maker Is Facing Growing Wave of Doubts About Its Finances and Earnings Statements
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First Brands Group, the auto parts maker facing a growing wave of doubts about its finances and earnings statements, is discussing options with its creditors for restructuring its $6 billion debt load that include a possible Chapter 11 bankruptcy filing.
The company’s advisers are sounding out lenders for new financing, which could be structured as a so-called debtor-in-possession loan to fund continuing operations if it begins the Chapter 11 process, said the people, who asked not to be named, citing private negotiations.
Representatives for First Brands did not respond to requests for comment. The plans are not final and could change.
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The preparations come little more than a month after First Brands paused an effort to raise $6 billion in the loan market to refinance its existing debt, in order to address requests from investors about its earnings and the use of an off-balance sheet financing method known as factoring that is tied to future revenues, Bloomberg reported.
Last week, as concerns about the company mounted, a $2 billion loan due in 2027 plunged to below 50 cents, from over 90 cents a week earlier. On Sept. 22, the company’s loans rose slightly.
Jefferies Financial Group was arranging the refinancing that got put on hold. More recently, the bank has told investors that it has had trouble getting information from First Brands, Bloomberg reported. Jefferies declined to comment.
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First Brands, which sells parts like windshield wipers, water pumps and filters, is owned by Patrick James, a businessman with a limited public profile. The company has grown through debt-funded acquisitions of products that are sold through mainstream retailers like Walmart and O’Reilly Auto Parts, according to Moody’s. It mostly borrowed in the leveraged loan market.
Walmart ranks No. 1 on the Transport Topics Top 100 list of the largest private carriers in North America.
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