Wauwatosa-based Briggs & Stratton Corp. has filed for Chapter 11 bankruptcy as part of a deal to sell substantially all of its assets to New York-based private equity firm KPS Capital Partners.
The deal provides Briggs with $677.5 million in debtor-in-possession financing to support operations during the sale and reorganization process. KPS committed $265 million of the financing while Briggs’ existing ABL lenders provided $412.5 million.
KPS, which also owns Life Fitness and Taylor Made Golf Co., among other investments, agreed to acquire Briggs for $550 million in cash as part of the deal and will act as the stalking-horse bidder in the court-supervised sale process. The deal with KPS is subject to higher or better bids from other potential buyers.
Todd Teske, chairman, president and chief executive officer of Briggs, said the company explored multiple options to strengthen its financial position over the last several months.
“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,” Teske said. “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 entered bankruptcy with $1.59 billion in assets and around $1.35 billion in debts.
In letters to customers and vendors, the company said it would continue with normal business operations and now had sufficient funding for ongoing operations.
The company also told retirees it would be ending its health and life insurance plans along some other benefits and distributions of pensions would be temporarily limited.
Briggs announced a reorganization plan in March that called for the sale of most of its U.S. products business, allowing the company to focus on making engines and developing a new line of offerings in battery power.
At the same time, the company also had $195 million in debt maturing in December. The sale of the products business would have covered the maturity of the debt, company executives said when the plan was announced.
The spread of COVID-19, however, limited interest and the ability to market those assets and efforts to access capital markets were hampered as well.
In June, the company announced it would use a 30-day grace period to delay a $6.7 million interest payment that was due June 15 while also paying out more than $5 million in retention bonuses to key executives in place of incentives for the coming fiscal year.
