KPS Capital Partners has completed a recapitalization of its portfolio company Motor Coach Industries International (MCI). KPS acquired MCI in September 2010 in partnership with Daimler North America Corp. and senior management.
MCI is a manufacturer of intercity coaches for the US and Canadian tour, charter, line-haul, commuter and transit markets. The company has a partnership with Daimler North America, whereby Daimler owns a minority equity position in MCI and MCI is the exclusive distributor in North America of Daimler’s Setra motor coaches and aftermarket parts. MCI is headquartered in the Chicago suburb of Des Plaines and operates manufacturing facilities in Winnipeg, Manitoba; Pembina, ND; and Loudonville, OH. The company has seven sales centers and eight service centers and employs over 1,500 associates across North America (www.mcicoach.com).
To complete the recapitalization, MCI raised a new $130 million term loan and extended its existing $115 million asset-based revolving credit facility. Proceeds from the recapitalization were used to refinance outstanding debt, to fund a $120 million cash distribution to investors, and for working capital purposes. The term loan was provided by TCW Direct Lending Group and the asset-based revolving credit facility was provided by a syndicate of banks with Wells Fargo Capital Finance acting as Arranger. Houlihan Lokey Financial Advisors acted as exclusive financial advisor to the company and privately placed the financing.
“This successful recapitalization validates the incredible transformation MCI has made under KPS ownership and we are pleased to return capital to our stockholders. MCI is the clear market leader with demonstrated best-in-class quality, unmatched reliability, robust customer service and support, and the lowest total cost of ownership,” said Rick Heller, Chief Executive Officer of MCI. “Our conservative capital structure and the financial support of our stockholders provide us with the resources to support our customers and important growth initiatives.”
KPS Capital Partners is the manager of the KPS Special Situations Funds, a group of private equity funds with over $6 billion of committed capital focused on investing in restructurings, turnarounds and other special situations. The KPS investment strategy targets manufacturing and industrial companies with strong market positions that are going through a period of transition or experiencing operating or financial difficulties. The firm’s portfolio companies have aggregate annual revenues of approximately $7 billion, operate 109 manufacturing plants in 26 countries, and employ over 51,000 associates worldwide. KPS Capital Partners is headquartered in New York (www.kpsfund.com).
2014 PEPD • Private Equity’s Leading News Magazine • 9-30-14