KPS Special Situations Funds Acquires Cloyes Gear and Products, Inc.

NEW YORK, May 17, 2006 -- KPS Special Situations Funds ("KPS") announced today that a newly formed affiliate has acquired a controlling equity interest in Cloyes Gear and Products, Inc. ("Cloyes"). Financial terms of the transaction were not disclosed.

Headquartered in Ft. Smith, Arkansas, Cloyes (http://www.cloyes.com/) is a leading supplier of timing systems and components for automotive engines and enjoys a dominant market position in the North American automotive aftermarket under the Cloyes(R) and Dynagear(R) brand names. Cloyes is one of only four global suppliers that provides customers with the design, engineering, manufacturing and supply chain management for the timing system in engines. Cloyes is also one of the few global suppliers that has demonstrated the expertise required to manufacture components used in growing markets for variable valve timing technology. The Company operates four manufacturing facilities in the United States, a manufacturing joint venture in Germany (Cloyes Europe GmbH), and three distribution/system assembly facilities in North America.

KPS will invest substantial capital in Cloyes to fund growth opportunities. Cloyes' previous owners have retained a minority ownership interest in the Company, and Trevor Myers will continue to serve as Chief Executive Officer under KPS' ownership. Mr. Myers and his management team will implement a business plan developed in partnership with KPS focused on improving operations and investing in select return-driven capital improvement projects.

Raquel Vargas Palmer, Principal of KPS, said "Trevor Myers and his team have built an extremely impressive business. Cloyes has led the trend in fuel efficient timing drive systems, formed global strategic relationships, and constantly evolved to better serve its customers. We look forward to building the Company through new business initiatives and acquisitions."

Mr. Myers said, "As a family-owned business, it was important for us to find the right partner -- one that would support Cloyes' growth and dedication to quality and innovative products. KPS was an obvious choice given its commitment to manufacturing excellence, its successful investment track record, and its experience in investing in the automotive sector. Our customers can expect that we will continue to provide innovative technology along with world class products and service."

Financing for this transaction was provided by LaSalle Business Credit, LLC.

About KPS Special Situations Funds

KPS Special Situations Funds are a family of private equity funds with over $600 million of committed capital focused on constructive investing in restructurings, turnarounds and other special situations. KPS has created new companies to purchase operating assets out of bankruptcy; established stand-alone entities to operate divested assets; and recapitalized highly leveraged public and private companies. The KPS investment strategy targets companies with strong franchises that are experiencing operating and financial problems. KPS invests its capital concurrently with a turnaround plan predicated on cost reduction, capital investment, and capital availability. Typically, the KPS turnaround plan is accompanied by a financial restructuring of the company's liabilities. The KPS investment strategy and portfolio companies are described in detail at the firm's website: http://www.kpsfund.com/