Engine maker Briggs & Stratton files for bankruptcy protection, agrees to sell assets to KPS
'The challenges we have faced during the COVID-19 pandemic have made reorganization the difficult but necessary and appropriate path forward,' Briggs & Stratton chairman says
Briggs & Stratton Corp. has filed for bankruptcy protection and agreed to sell assets to KPS Capital Partners LP as the company has faced declining sales and losses since the onset of the Covid-19 pandemic.
KPS on Monday said it will acquire Briggs & Stratton's assets, including equity and foreign subsidiaries, for about $550 million, and it would act as the stalking-horse bidder in the court-supervised sale process. The maker of small engines for lawn mowers and other outdoor maintenance equipment filed for bankruptcy in the U.S. Bankruptcy Court in Missouri.
Shares of Briggs & Stratton fell about 25% in premarket trading before trading was halted Monday morning.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BGG | NO DATA AVAILABLE | - | - | - |
Briggs & Stratton said it has obtained $677.5 million in debtor-in-possession financing, with $265 million committed by KPS and $412.5 million from a group of lenders. The debtor-in-possession facility, following court approval, will ensure it has enough cash to fund its operations--such as paying employee wages and benefits and handling orders and shipments--during the chapter 11 process, the company said.
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"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," said Todd Teske, Briggs & Stratton's chairman, president and chief executive.
KPS said it has entered into a new collective bargaining agreement with the United Steelworkers of America for Briggs & Stratton's hourly employees at its Wisconsin manufacturing facilities. The agreement would be effective after the acquisition's completion, KPS said.
A group of banks including Wells Fargo, Bank of America, BMO Harris Bank and PNC Business Credit have committed to provide exit financing to Briggs & Stratton, KPS said. Wells Fargo has also agreed to continue providing floor-plan financing, KPS added.
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Serving as Briggs & Stratton's legal counsel are Weil, Gotshal & Manges LLP, Foley & Lardner LLP, and Carmody MacDonald P.C. Ernst & Young is the company's financial adviser, and Houlihan Lokey Capital Inc. its investment banker. Kirkland & Ellis LLP is the legal counsel for KPS.