(Bloomberg) -- Briggs & Stratton Corp., the century-old maker of engines for lawn mowers and garden equipment, filed for bankruptcy with plans to sell its assets to a private equity firm specializing in manufacturers.
KPS Capital Partners, whose portfolio includes TaylorMade golf clubs and Life Fitness gym equipment, has agreed to serve as the lead bidder in a court-supervised auction with a $550 million offer and is contributing to a bankruptcy loan that will keep Briggs & Stratton operating, according to a statement. KPS said it has already negotiated a new contract with the United Steelworkers of America.
The filing in U.S. Bankruptcy Court in Missouri listed more than $1 billion each of assets and liabilities. The company has been pressured by falling sales and unfavorable weather conditions in key markets, as well as other factors including the 2018 bankruptcy of Sears Holdings Corp. The company also cited pressures from the Covid-19 pandemic, which “have made reorganization the difficult but necessary and appropriate path forward to secure our business.”
“KPS intends to grow the new Briggs & Stratton aggressively through strategic acquisitions,” said Michael Psaros, co-founder and co-managing partner of KPS, in a statement. “The new Briggs & Stratton will be conservatively capitalized and not encumbered by its predecessor’s significant liabilities.”
The offer by KPS would need court approval and could still be topped by a rival bidder. Trading in Briggs & Stratton’s stock was halted while the news was disseminated.
Briggs & Stratton said in a statement that it lined up $677.5 million of debtor-in-possession financing that will help fund operations during the court reorganization. KPS said it’s contributing $265 million of that sum.
Banks including Wells Fargo & Co., Bank of America Corp., BMO Harris Bank and PNC Business Credit will provide exit financing for a new company created through the acquisition of Briggs & Stratton’s assets, according to a spokesman for KPS.
Briggs & Stratton, based in the Milwaukee area, began as an informal partnership in 1908 and grew alongside American suburbs, with its engines powering brands such as Craftsman, Toro and Snapper. It had 5,200 employees at the end of last year.
KPS, based in New York, runs the KPS Special Situations Funds with more than $11.4 billion of assets. The firm said its portfolio companies run 150 manufacturing facilities in 26 countries with about 23,000 employees.
Kirkland & Ellis is legal counsel for KPS. Briggs & Stratton previously hired Houlihan Lokey Inc. to advise it on strategic options including refinancing its debt, selling assets, and cutting costs.
The case is Briggs & Stratton Corporation, 20-43597, U.S. Bankruptcy Court, Eastern District of Missouri (St. Louis).
(Updates with additional details on exit financing in seventh paragraph)
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