Briggs & Stratton enters into $550M sales agreement with KPS Capital, files Chapter 11 reorganiz

Manufacturer Briggs & Stratton Corp. announced early Monday an agreement to sell most of its assets to KPS Capital Partners for about $550 million and at the same time filed a Chapter 11 bankruptcy reorganization petition.

The sale and Chapter 11 filing comes after Wauwatosa-based Briggs & Stratton received two extensions on its revolving credit agreement. In June, the company elected for a 30-day grace period on a $6.7 million interest payment, according to an 8-K filing with the U.S. Securities and Exchange Commission. Briggs & Stratton then received an additional 4-day extension.

The 8-K filing noted that Briggs & Stratton (NYSE: BGG) had $271.3 million in borrowings and $53.1 million in letters of credit on July 14. Availability under the credit agreement was $65.6 million.

In the purchase agreement, KPS would act as the stalking-horse bidder through a court-supervised sale process. KPS noted the agreement is subject to higher or better bids by potential purchasers. KPS agreed to invest $265 million in a FILO tranche of Briggs & Stratton's debtor in possession financing. With that, KPS will have the right to credit bid its $265 million in debtor in possession, or DIP financing. (FILO tranches are a first-in, last-out portion of the asset-based facility.)

“We are very excited to acquire Briggs & Stratton, a legendary brand in American manufacturing and the leading company in its industry. Briggs & Stratton enjoys a leading market position, scale, a global manufacturing footprint, world-class design and engineering capabilities, and a portfolio of industry-leading products sold under iconic brand names," KPS co-founder and co-managing partner Michael Psaros said in a press release. "We intend to capitalize on the company’s many attractive growth opportunities and to support its already substantial investment in research and development, technology and new product development. KPS intends to grow the new Briggs & Stratton aggressively through strategic acquisitions."

KPS also entered into an agreement with United Steelworkers of Americas with a new collective bargaining agreement for Briggs & Stratton's hourly employees. These workers are represented by the union at Briggs & Stratton manufacturing facilities in Wisconsin.

“KPS is committed to the expeditious acquisition of Briggs & Stratton to provide certainty of outcome and confidence in the new company’s future for all of its stakeholders, including customers, employees and suppliers. The company and its stakeholders will benefit from KPS’ demonstrated commitment to manufacturing excellence, continuous improvement, global network, access to capital and significant financial resources. The new Briggs & Stratton will be conservatively capitalized and not encumbered by its predecessor’s significant liabilities," Psaros added.

To facilitate the sale, Briggs & Stratton filed for a court-supervised voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code. Briggs & Stratton also obtained $677.5 million in DIP financing, including the $265 million committed by KPS and $412.5 million from existing ABL lenders.

"Over the past several months, we have explored multiple options with our advisors to strengthen our financial position and flexibility. The challenges we have faced during the COVID-19 pandemic have made reorganization the difficult but necessary and appropriate path forward to secure our business. It also gives us support to execute on our strategic plans to bring greater value to our customers and channel partners. Throughout this process, Briggs & Stratton products will continue to be produced, distributed, sold and fully backed by our dedicated team," Briggs & Stratton CEO, president and chairman Todd Teske said in a press release.

Briggs & Stratton has about 1,500 Milwaukee-area employees and 5,200 companywide, according to Milwaukee Business Journal research.

Wells Fargo will provide floorpan financing to support Briggs & Stratton customers with the KPS ownership. A syndicate of banks including Wells Fargo, Bank of America, BMO Harris and PNC Business Credit also committed to exit financing for Briggs & Stratton.

Kirkland & Ellis LLP is acting as legal counsel to KPS. "We have a storied past and a bright future, built on our foundational expertise in applying power. Our portfolio of innovative engines, robust lines of products, and high-performance commercial batteries positions Briggs & Stratton to meet our global customers' needs for power to get work done, now and in the future," Teske said.

Read the original article here.

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