Collins & Aikman Announces Closing Details of Heartland Investment
TROY, Mich.--Feb. 26, 2001--Collins & Aikman Corporation announced today that it has completed the sale of 25 million shares of its common stock to Heartland Industrial Partners, L.P. (Heartland). The company also announced that its former controlling shareholders, Blackstone Capital Partners, L.P. (Blackstone) and Wasserstein Perella Capital Partners L.P. (Wasserstein) completed the sale of 27 million shares of common stock to Heartland. As a result of this transaction, Heartland will own approximately 60 percent of the outstanding shares and Collins & Aikman has obtained an equity infusion of $125 million before transaction fees and expenses. These funds will initially be used to pay down the Company's revolving credit facility and in the long term, will be used to fund corporate growth initiatives.Commenting on the transaction, Thomas E. Evans, Collins & Aikman's Chairman and Chief Executive Officer, stated, "As we previously indicated, having Heartland as part of our team is a "win-win-win" for Collins & Aikman, our customers and our investors. We're very pleased to have this transaction completed, and I'm confident that it should be a significant enabler for Collins & Aikman to further strengthen its product offerings and market positions."
Other Transaction Highlights Include:
| -- | 16,510,000 of the 25 million common shares sold by the Company to Heartland were in the form of a non-voting convertible preferred stock, which will be convertible into common stock upon shareholder approval at the Company's March 6th special meeting of shareholders. |
| -- | Due to the change in control resulting from the transaction, Collins & Aikman's existing bank debt facilities have been renegotiated which has resulted in substantial flexibility in existing bank debt covenants. |
| -- | The Company has established a new $50 million term loan (tranche D) at an effective interest rate of LIBOR plus 4-1/4 percent, which will be used to retire the Company's 11-1/8 percent JPS senior notes, due June, 2001. |
| -- | As the Company's former controlling shareholders -- Blackstone and Wasserstein -- have agreed to vote in favor of the shareholder proposals, a favorable shareholder vote is assured at the Company's March 6th special meeting of shareholders. |
Following the Company's special shareholder meeting, the Company's Board of Directors will expand to 13 members, composed as follows: Thomas E. Evans, Chairman and CEO -- one seat, Heartland -- seven seats, Blackstone -- one seat, Wasserstein -- one seat, and independent directors -- three seats.
Commenting on the transaction, David Stockman, founder of Heartland Industrial Partners, L.P. stated, "With this transaction now finalized, we look forward to helping Collins & Aikman realize its long-term growth potential. On behalf of Heartland, I'd like to thank the Company's bank group and bondholders, Blackstone, Wasserstein and the entire Collins & Aikman management team for their very strong support."
Collins & Aikman, with annual sales approaching $2 billion, is the global leader in automotive floor and acoustic systems and is a leading supplier of automotive fabric, interior trim and convertible top systems. The Company's operations span the globe through 72 facilities, 13 countries and nearly 15,000 employees who are committed to achieving total excellence. Collins & Aikman's high-quality products combine industry-leading design and styling capabilities, superior manufacturing capabilities and the industry's most effective NVH "quiet" technologies. Information about Collins & Aikman is available on the Internet at www.collinsaikman.com.
Heartland Industrial Partners, L.P. is a private equity firm established to "invest in, build and grow" industrial companies in sectors ripe for consolidation and long-term growth. The firm has equity commitments in excess of $1.1 billion and intends to increase its commitments to $2 billion. Heartland was founded by David A. Stockman, a former partner of the Blackstone Group and a Reagan administrative cabinet officer; Timothy D. Leuliette, the former President and Chief Operating Officer of Penske Corporation; and Daniel P. Tredwell, a former Managing Director of Chase Securities.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from the anticipated results because of certain risks and uncertainties, including but not limited to general economic conditions in the markets in which Collins & Aikman operates, fluctuations in the production of vehicles for which the Company is a supplier, labor disputes involving the Company or its significant customers, changes in consumer preferences, dependence on significant automotive customers, the level of competition in the automotive supply industry, pricing pressure from automotive customers, the substantial leverage of the Company and its subsidiaries, limitations imposed by the Company's debt facilities, charges made in connection with the integration of operations acquired by the Company, the implementation of the reorganization plan, changes in the popularity of particular car models or particular interior trim packages, the loss of programs on particular car models, risks associated with conducting business in foreign countries and other risks detailed from time to time in the Company's Securities and Exchange Commission filings including without limitation, in Items 1 and 7 of the Company's Annual Report on Form 10-K for the year-ended December 25, 1999, and Item 1 in the Company's Quarterly Report on Form 10-Q for the periods ended April 1, 2000, July 1, 2000 and September 30, 2000.