In the latest of a series of moves to acquire distressed automotive assets, Cerberus has agreed to buy most of auto-parts maker Tower Automotive’s assets for about $1 billion. The sale of assets would help Tower to emerge from bankruptcy protection. In recent times Cerberus has emerged briskly as a major force in the auto industry. Last year, the firm had acquired a 51 percent stake in GMAC, formerly General Motors Acceptance Corporation, the crucial consumer-finance arm of General Motors Corp.
Cerberus Capital Management, the private-equity group is has decided to spread out its growing automotive interests by buying Michigan-based Tower Automotive, one of the biggest makers of vehicle frames and chassis modules. Tower had filed for bankruptcy protection in February 2005, and the acquisition will require U.S. Bankruptcy Court approval and is subject to an auction in order to attract more bids for the acquisition.
If competing bids are offered, the auction is scheduled to be held on June 21, with Tower seeking court approval June 22 and a closing by the end of July, Tower said in its statement. The bidding deadline has been set June 15. Tower contacted around 20 potential investors and negotiated proposals with Cerberus and three other private equity firms, Tower said in a court filing.
Speaking over the issue, Tower CEO Kathleen Ligocki has said, ‘We have accomplished a tremendous amount during the last few years to revitalize Tower so the company can strongly compete in today’s global automotive marketplace. The recapitalization of the company is the last major milestone in our restructuring process.’
Cerebus is also intended to recapitalize Delphi Corp. through a capital combination of as much as $3.4 billion, in exchange for a controlling stake in the reorganized company. According to the reports, Cerberus is also among the private-equity firms seeking to invest in DaimlerChrysler AG’s Chrysler unit.
