Struggling engine parts company Stanadyne Holdings Inc., owner of Stanadyne Corp., is selling a business unit to Clarcor Inc. for $325 million to pay off debt.
Standyne, headquartered in Windsor, Connecticut, manufactures diesel fuel injection systems.
Stanadyne is selling its fuel filtration business to Clarcor, a Franklin, Tennessee-based engine filter company. The filtration business includes a manufacturing facility in Washington, North Carolina, and administrative operations in Windsor, Connecticut, the company said in an April 28 statement. The deal closed May 2.
The cash allows Stanadyne to repay the amounts outstanding on its senior subordinated notes and senior discount notes, which it had said in an March 31 filing with the U.S. Securities and Exchange Commission that it was not sure if it could refinance. The debt, about $317 million in total, is scheduled to mature in 2014 and 2015.
The company said on March 31 that it hadn't been able to refinance $217 million in debt scheduled to mature this year, or an additional $100 million set to mature in 2015. The company's accountant, PwC LLP, raised substantial doubt about the company's ability to continue as a going concern because of Stanadyne's debt load.
The company has been able to grow sales, from $245.8 million in 2011 to $267.8 million in 2013, but still said it did not have the cash on hand to repay its debt.
Robert W. Baird & Co. and Ropes & Gray LLP served as Stanadyne's financial and legal advisers, respectively, on the sale to Clarcor. XMS Capital Partners was Clarcor's financial adviser, while Bass Berry & Sims PLC provided legal advice.
For last week's edition of Turnaround Tuesday, see "Retailer Body Central Pursues Strategic Alternatives."
For more struggling companies, see Mergers & Acquisitions Distressed Company Watch List.