Sale of Briggs & Stratton set through bankruptcy court
The sale of Briggs & Stratton Corp. through Chapter 11 bankruptcy could occur by Sept. 25, a date company officials say is important if larger payments are to be made to creditors.
The Milwaukee Business Journal reported Monday that a sale to the New York City private equity firm KPS Capital Partners has to be completed by Sept. 27 or a deal between Briggs, KPS and creditors would become void.
Briggs filed documents containing the information in bankruptcy court Monday.
The developments emerged on the eve of a hearing scheduled for Tuesday in St. Louis to approve the transaction that would bring new ownership to the iconic Milwaukee-area manufacturer founded in 1908, according to senior reporter Rich Kirchen.
Briggs & Stratton and its investment banking firm argue that the agreement provides the best business outlook for the company, the best outcome for employees and management and the highest possible payment of about $40 million to unsecured creditors, the MBJ reports.
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Company officials told the Daily American Republic after the Chapter 11 reorganization was announced at the end of July, that business would continue as usual at the Poplar Bluff facility.
“We have reached an agreement with KPS Capital Partners to acquire essentially all of the company’s assets and assume certain customer, employee and vendor liabilities through a court-supervised sale process (known as a Section 363 process),” Rick Carpenter, vice president of corporate marketing and communications, said at the time.
Among other things, Carpenter said, the sale agreement is subject to higher or better bids from other potential purchasers.
Carpenter said liabilities to be assumed include rebates and allowances, warranties, employee accrued vacation and post petition vendor accounts payable.
The MBJ reports Briggs & Stratton and KPS reached an agreement with Briggs’ largest creditor, Pension Benefit Guaranty Corp., which will have an unsecured creditor claim of $225 million.
The Briggs & Stratton pension plan will be terminated and Pension Benefit Guaranty Corp. will assume sponsorship of the pension plan.
Besides the PBGC unsecured claim, Briggs & Stratton listed a total of nearly $260 million for its 30 largest unsecured creditors, according to the report. By far the largest unsecured creditor at $195.5 million is a group holding unsecured notes.
If the transaction is delayed until early October, the payment will decrease by $15 million, and if the deal doesn’t close until early November, no money will be left, William Peluchiwski, a senior managing director for Briggs’ investment banking firm Houlihan Lokey of Chicago, said in a court filing, according to the MBJ.
“I think the key thing to note is that the plan is to operate ‘business as usual’ through the reorganization process as we have DIP (debtor in possession) financing that allows us to fund the business to manufacture, including Poplar Bluff, and supply products to our customers. After the reorganization process we will be acquired by another company,” Carpenter told the DAR in July.
Briggs & Stratton opened in 1989 in the Poplar Bluff Industrial Park.
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