Metaldyne gets OK of powertrain sale bid process; break-up fee lowered

By Jennifer Lanning Drey

Portland, Ore., June 25 - Metaldyne Corp. obtained court approval of the bidding procedures related to the proposed sale of its powertrain group to RHJ International SA, according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, RHJI currently holds about 60.1% of the outstanding capital stock of Metaldyne's indirect parent, Asahi Tec.

The transaction is valued at $100 million, including up to $25 million in cash, a new $50 million secured note and the exchange of an existing €15 million demand note issued by Metaldyne GmbH for a term loan to RHJI's newly formed acquisition subsidiary.

In addition, RHJI has agreed to inject additional cash into the newly formed entity to fund future working capital needs.

Under the approved bid procedures, competing bids are due by 5 p.m. ET on July 23.

If any competing bids are received, an auction will be held July 24.

Break-up fee reduced

According to Thursday's filing, RHJI and Metaldyne verbally agreed during a Wednesday hearing to lower the break-up fee that Metaldyne will pay if it selects another bidder.

Metaldyne will now pay RHJI a $1.5 million break-up fee and reimburse up to $750,000 of its expenses if it selects another bid. The original sale agreement included a $2 million break-up fee plus the expense reimbursement.

As previously reported, Metaldyne's term lenders had objected to the bid procedures and said the break-up fee was unnecessary because RHJI would bid on the assets regardless of whether a break-up fee was included.

The sale hearing is scheduled for July 27.

Metaldyne, a Plymouth, Mich.-based maker of metal-based components, assemblies and modules for transportation-related powertrain and chassis applications, filed for bankruptcy on May 27. The Chapter 11 case number is 09-13412.

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