More Financial News

Credit agencies renew high rankings for Northwestern Mutual; Baird expands analyst coverage of retail stocks; Axis Automation Group obtains financing to expand; Grede Foundries files for bankruptcy

Credit agencies renew high rankings for Northwestern Mutual

Northwestern Mutual Life Insurance Co. announced last week that it maintains the best possible insurance financial strength ratings from the nation’s four major rating agencies.

In affirming Northwestern Mutual’s ratings, the four agencies cited the Milwaukee-based company’s competitive advantages, which include the company’s strong capital position, financial flexibility, successful distribution system, large and stable block of traditional life insurance, and strong operating fundamentals including mortality, policyowner persistency and expense control.

"We are pleased that Northwestern Mutual has maintained the best possible ratings for financial strength from all four major rating agencies," said Edward Zore, chairman and chief executive officer of Northwestern Mutual. "To achieve this in the current tumultuous environment highlights how the company’s business model and long-term approach differentiate Northwestern Mutual in the marketplace. Year after year, we earn trust by delivering consistent strength and excellent value to our policyowners and clients."

Baird expands analyst coverage of retail stocks

Robert W. Baird & Co. recently expanded its coverage of softline retail companies. Erika Maschmeyer, CFA, now covers Coach Inc., The Gap Inc., J.C. Penney Inc., Nordstrom Inc., and Urban Outfitters Inc.

Maschmeyer already covered retail firms such as Kohl’s Corp., Regis Corp., Sally Beauty Holdings Inc., and Ulta Salon, Cosmetics & Fragrance Inc.

Baird’s consumer and retail analysts also include Peter Benedict, hardlines/broadlines; Craig Kennison, consumer/automotive services; Mitch Kummetz, active/outdoor; and David Tarantino, restaurants. The team covers more than 60 companies.

Axis Automation Group obtains financing to expand

Even manufacturers who are growing in today’s market have reported difficulty in gaining bank financing. Axis Automation Group Inc., a Waterloo-based designer and manufacturer of automated systems primarily used in the food service industry, was facing such a difficulty several months ago.

Axis Automation’s most popular products apply salt, sugar, sprinkles and other toppings to food that is moving along conveyor belts. The company also makes controlling systems and software that coordinates the topping equipment with other systems.

While Axis Automation has seen growth in orders for its food-related equipment, its previous bank was unwilling to extend a new line of credit to help fuel its expansion.

“We were with a bank, it was one of the ones that had problems last year,” said Ty Sarajian, president of the company. “They were pulling back on financing with many of the people we know. And we needed help.”

With the assistance of Spire Capital Advisors, a Milwaukee-based merger and acquisition advising firm, Axis Automation was able to secure a new line of credit with West Bend-based Westbury Bank. Sarajian would not give the amount of the credit line, but said it was less than $1 million.

The line of credit will allow Axis Automation to increase production to meet the increased demand for its products and systems.

“We can now do two to three (systems) at the same time rather than have to do them sequentially,” Sarajian said. “As we build equipment, we need to finance it over a two to three month period.”

The company has also expanded its research and development. It now has two patent pending products in development that Axis expects to turn into new revenue streams.

Axis Automation now has 17 employees. In the last two months, the company has hired three new engineers, Sarajian said.

The company is also hoping its new relationship with Westbury Bank will continue when it moves to a new facility in 2010. Axis’ lease in Waterloo expires next June, and the company is now looking for a building in Oconomowoc or Hartland, and the bank has expressed interest in helping it fund the move.

“We want to be right in the middle between Milwaukee and Madison,” Sarajian said. “We draw talent from both places. We don’t want to move too far to attract some people (from one over the other). And if we move farther east, we’ll lose our Madison people.”

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Grede Foundries files for bankruptcy

Grede Foundries Inc. has filed a petition for reorganization under Chapter 11 of the United States Bankruptcy Code and has a potential "stalking horse" buyer willing to finance it until a public sale where other suitors can submit bids for the company.

Wayzata Investment Partners LLC of Wayzata, Minn., an investment adviser and manager of private investment funds with more than $5 billion in assets, has offered to provide a $45 million temporary loan facility to allow time for an orderly sale under the supervision of the Bankruptcy Court.

Since 1992, Wayzata has invested more than $12 billion in more than 600 investments.

The filing, made recently in the U.S. Bankruptcy Court for the Western District of Wisconsin, was driven by the impact of the current economic downturn on the company and its customers, particularly the automotive industry, said Grede board chairman Richard Koenings.

Koenings said the reorganization effort and asset sale will position the company for a turnaround as the nation emerges from the most difficult economic period it has seen in generations.

"The significant deterioration in the automotive and construction industries and the resulting impact on our company and the foundry industry in general require that we take this strategic action," Koenings said. "We have carefully explored many options, and believe a sale to a strong financial backer like Wayzata is the best way to effectively proceed in what has been an exceedingly difficult marketplace."

Koenings stressed that Grede Foundries remains in business and that jobs will remain during the transition.

"This move gives us the time to restructure while we continue to do business and operate our plants," he said. "Grede will continue to buy goods and services from its vendors, support its workforce and provide its customers with the same quality products and service they’ve come to expect from us. Our goal is to preserve and strengthen our business so that we can compete successfully in the future."

Wayzata has also agreed to make the first bid, sometimes called a "stalking horse" bid, for the company.

"Wayzata’s commitment shows their belief in the strength of the Grede name and its respected position in the foundry industry," Koenings said. "We appreciate Wayzata’s support for the company and look forward to working with them to complete this process and create a stronger future for Grede."

Grede says that it has already received inquiries from other parties that are interested in the company’s production capacity.

Koenings said that customers have been especially supportive and have offered to provide financial support. Grede expects the sale and related bidding process to move steadily through the court system, he said.

"We are deeply committed to doing everything necessary to put our company on solid footing as the nation begins to rise out of the worst economic conditions since the Great Depression," Koenings said.

"We look forward to continuing to do the quality work Grede Foundries has become known for in our nearly 90 years of business. Our customers very clearly want us to succeed and have been very supportive."


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