Tecumseh Products to sell majority of electrical components operations to pay off debt

By Devika Patel

Knoxville, Tenn., July 3 - Tecumseh Products Co. announced it has signed an agreement to sell the majority of its electrical components business operations to Regal Beloit Corp. for $220 million in cash, which will be used to repay Tecumseh's second lien credit agreement as well as a substantial portion of its outstanding first lien debt

The operations to be sold accounted for about 70% of the electrical components unit's sales in 2006.

"This is another important step in our ongoing efforts to reduce the company's debt, sharpen its strategic focus, and improve its financial performance," said James J. Bonsall, Tecumseh's president and chief operating officer, in a news release. "Regal Beloit Corp., as a worldwide leader in electrical motion control products, will be well positioned to further develop and grow these businesses as part of its overall product portfolio."

Completion of the transaction is expected to occur in the third calendar quarter.

Rothschild Inc. served as the financial advisor to Tecumseh.

Tecumseh Products Co. is a Tecumseh, Mich.-based manufacturer of compressor and other products. Regal Beloit Corp. is a Beloit, Wis.-based maker of industrial electric motors and tools.

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