Harvard Industries Completes Sale of Kingston-Warren
4 October 1999
Harvard Industries Completes Sale of Kingston-Warren
Transaction Marks Critical Phase in Successful Corporate Turnaround
LEBANON, N.J., Oct. 4 -- Harvard Industries, Inc.
today announced the completion of its previously announced sale
of substantially all the assets of its Kingston-Warren subsidiary to
Hutchinson S.A. for the sum of $115 million in cash, subject to certain
adjustments.
The sale marks a critical phase of Harvard Industries' comprehensive
reorganization program.
Proceeds of the sale were used to pay off the Company's asset-based bank
loans and senior secured notes. The Company has also put into place a new
two-year $50 million revolving credit facility with General Electric Credit
Corp., a facility that will be used for general corporate purposes and
potential acquisitions.
Based in Farmington Hills, Mich., Kingston-Warren produces single- and
multi-durometer sealing products and systems. Fiscal 1999 revenues were
approximately $119 million.
"The proceeds from the sale of Kingston-Warren were used to pay off all
the Company's long-term debt and revolving credit facility, thereby de-
leveraging the Company's balance sheet and enhancing our capital structure,"
said Roger Pollazzi, Harvard Industries' chairman and CEO. "The remaining
proceeds from the sale, along with a new credit facility, will be available to
fund the Company's ongoing operations and short-term growth."
"The recent restructuring of the Company, including the sale of
unprofitable or non-core units as well as the elimination of the sources of
historical operating losses, has enabled Harvard to generate operating income
(excluding fresh start amortization) this year," said Pollazzi, who joined the
Company during its bankruptcy period as chairman and CEO. "We are now in a
position to use our new capital structure to grow internally while taking
advantage of any opportunistic acquisition opportunities that would further
diversify the Company's customer base."
Given the competitive nature of the automotive industry, customer
diversification is a vital element of short- and long-term corporate planning.
The Company's main business strategy will be to focus on leveraging core
competencies in the design and production of OEM automotive components. This
will enable Harvard to make available a greater range of products and systems
for existing OEM automotive customers while targeting new markets and
customers in the non-automotive industrial sector and the automotive
aftermarket.
"Auto makers are finding new ways of building their products and they are
looking at suppliers like Harvard who can support those new initiatives,"
Pollazzi said. "We are going to grow by taking advantage of the opportunities
inherent in those changes."
Part of the business strategy, he said, is to come together with companies
that offer a strategic fit to augment Harvard's product line.
"The 'right company' would likely involve a company that makes aftermarket
products with high value added," Pollazzi said. "We are prepared to move
quickly on companies that make good sense for us."
Harvard has retained Lehman Brothers, Inc. to assist in identifying
alternative acquisitions.
Having recently completed a successful turnaround, Harvard's new
management team is convinced that future success and profitability depend on
the Company's ability to increase its activity in industrial and other
manufacturing sectors while selectively increasing its share in existing
markets.
At the time that Harvard emerged from court protection in November 1998,
the Company's customer mix was 95 percent automotive and 5 percent industrial.
Pollazzi expects to change that mix to 60 percent automotive and 40 percent
industrial over the next two years. The Company intends to produce products
for the heavy truck and construction equipment markets as well as increase
product lines for the automotive market.
Harvard Industries designs, develops and manufactures a broad range of
components for OEM manufacturers, the automotive aftermarket, aerospace and
industrial and construction equipment applications worldwide. The Company
employs approximately 3,000 employees at 10 plants in the United States and
Canada.
Statements herein regarding the Company's future performance, including
the Company's ability to consummate transactions, constitute forward-looking
statements within the meaning of the Securities Act of 1933 and the Securities
Exchange Act of 1934. Such statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
projected. With respect to the Company's long-term business strategies,
management has made certain assumptions regarding the Company's performance
which may change or be affected by, among other things, customer demand for
the Company's products, and adverse changes in general, market and industry
conditions. In addition, there can be no assurance that the Company will be
able to successfully identify, negotiate or complete any acquisitions or
divestiture transaction, which the Company may be currently contemplating.
Management believes that forward-looking statements are reasonable; however,
undue reliance should not be placed on such forward-looking statements, which
are based on current expectations.