foundry

KPS Sells Waupaca Foundry to Hitachi Metals

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KPS Capital Partners has signed an agreement to sell its portfolio company Waupaca Foundry to Hitachi Metals for $1.3 billion in cash.  Completion of the transaction is expected during the fourth quarter.

Waupaca Foundry, with annual sales of approximately $1.7 billion, is the largest iron foundry company in the world and produces gray and ductile iron castings using state-of-the-art technology. Waupaca supplies iron castings to the automotive, commercial vehicle, agriculture, construction and industrial markets.  The company operates six manufacturing facilities located in Wisconsin (4), Indiana, and Tennessee. Waupaca employs approximately 3,900 people and is headquartered in Waupaca, WI (www.waupacafoundry.com).

“The success of our investment in Waupaca demonstrates KPS’ ability to see value where others do not, to buy right and to make businesses better,” said David Shapiro, a Managing Partner of KPS.  “In 2012, we recognized the transformation of the North American iron foundry market and the unrivaled importance of Waupaca to its customers and the end markets that it serves. The sale of Waupaca to Hitachi Metals, a leading multinational corporation, is a great outcome for our investors, Waupaca, its management, employees and customers.

KPS Capital Partners is the manager of the KPS Special Situations Funds, a group of private equity funds with $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 $8.1 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).

“KPS worked with management to improve every aspect of Waupaca’s business, resulting in profitability increasing by more than 40% in just over two years. The investment return generated for our investors in the Waupaca transaction is further validation of the KPS investment strategy, which we have successfully executed over many years and across numerous economic cycles,” said Mr. Shapiro.

“KPS recognized the potential of our business two years ago. Working in partnership with KPS, we invested significantly in our operations and people, which included an expansion of our production capacity and launching numerous continuous improvement initiatives across all six of our foundries,” said Gary Gigante, Chief Executive Officer of Waupaca.  “We are very grateful to KPS for its leadership and its commitment to improving and growing our business.”

Hitachi Metals manufactures and markets high-grade metal products and materials, magnetic materials and applications, high-grade functional components and equipment, wires, cables, and related products. The company is based in Tokyo (http://www.hitachi-metals.co.jp/e/).

“We are very proud to have had the opportunity to partner with Gary Gigante, his management team and all the dedicated employees of Waupaca. The material value created for our investors since 2012 is the result of their collective effort, for which we are very grateful. We are confident that Waupaca will continue to grow and prosper in the future as part of Hitachi Metals,” Mr. Shapiro concluded.

2014 PEPD • Private Equity’s Leading News Magazine • 8-19-14

KPS Capital Partners Recaps Waupaca Foundry

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KPS Capital Partners has completed a recap of its portfolio company Waupaca Foundry.  The proceeds of the recapitalization, funded by a $200 million upsizing of the company’s term loan, were used to fund a $200 million cash distribution to stockholders.

KPS acquired ThyssenKrupp Waupaca, Inc., which was renamed Waupaca Foundry, Inc., from ThyssenKrupp Budd Company in June 2012.  Waupaca Foundry is the largest iron foundry company in the world and produces gray and ductile iron castings using state-of-the-art technology. Waupaca is a  North America’s leading supplier of iron castings to the automotive, truck, agriculture, construction, hydraulics and commercial vehicle markets.  The company operates six manufacturing facilities located in Wisconsin (4), Indiana, and Tennessee. The company employs approximately 3,700 people and is headquartered in Waupaca, WI (www.waupacafoundry.com).

“Waupaca is now a thriving independent company under KPS’ ownership, and we are pleased to return capital to our stockholders. This recapitalization validates the successful transformation of Waupaca that was achieved in a very short period of time,” said Gary Gigante, Chief Executive Officer of Waupaca.  “Our conservative capital structure and the financial support of our stockholders provide us with the resources to support our customers and grow aggressively, both organically and through acquisitions.”

Financing for the transaction was provided by a syndicate of banks and institutional investors with GE Capital Markets acting as Lead Arranger.  RBC Capital Markets acted as special advisor to KPS.

KPS Capital Partners is the manager of the KPS Special Situations Funds, a group of private equity funds with over $2.5 billion of committed capital focused on investing in restructurings, turnarounds and other special situations. KPS has created new companies to purchase operating assets out of bankruptcy; established stand-alone entities to operate divested assets; and recapitalized highly leveraged public and private companies. The KPS investment strategy targets companies with strong franchises that are experiencing operating and financial problems. KPS portfolio companies, as of September 30, 2012, have aggregate annual revenues of approximately $6.8 billion, operate 85 manufacturing plants in 25 countries, and employ over 29,000 associates, directly and through joint ventures worldwide.  KPS Capital Partners is headquartered in New York (www.kpsfund.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 2-11-13

Industrial Opportunity Partners Acquires Aarrowcast

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Industrial Opportunity Partners has acquired Aarrowcast, a manufacturer of ductile and gray iron castings. “We are very excited to acquire Aarrowcast, a market leader with unique manufacturing capabilities and a solid history of providing complex products to a long list of market-leading customers,” said Adam Gottlieb, Senior Managing Director of IOP.

Aarrowcast operates a 210,000 square foot foundry that produces 85 million pounds of ductile and gray iron castings used by original equipment manufacturers in the agriculture, off-highway heavy truck, military and construction industries. The company is based in Shawano, WI (www.aarrowcast.com).

The company’s senior management team, led by Ben Grigg, President and CEO, will continue to manage and grow the business. In addition, Andrew Weller, an IOP Operating Principal, will assume the newly-created position of Chairman of the company. Mr. Weller has direct experience in overseeing and operating iron foundries.

PNC Bank and RBS provided the senior financing, while Yukon Partners provided the subordinated financing for the acquisition.

Industrial Opportunity Partners focuses on acquiring and overseeing middle-market manufacturing and value-added distribution businesses, typically with revenues between $30 million and $350 million. IOP targets businesses with strong product, customer, and market positions and provides management and operational resources to support sales growth and operational improvements. The firm was founded in 2005 and is located in Evanston, IL (www.iopfund.com).

Aarrowcast represents IOP’s first platform investment in Industrial Opportunity Partners II, L.P., IOP’s recently raised $275 million committed fund.

William Blair represented Aarrowcast and the selling shareholders in this transaction.

© 2012 PEPD • Private Equity’s Leading News Magazine • 8-31-12