Briggs & Stratton Corporation, has joined many other large companies in the retail and energy sector in filing for Chapter 11 bankruptcy.
The company announced it has entered into a definitive stock and asset purchase agreement with KPS Capital Partners, LP (KPS), which has more than a 20-year history focused on successfully developing world-class, industry-leading manufacturing companies.
Under the terms of the agreement, an affiliate of KPS formed for purposes of this transaction has agreed to acquire substantially all of the company’s assets and assume certain customer, employee and vendor liabilities, and it would act as the stalking-horse bidder through a court-supervised sale process (known as a Section 363 process). Among other things, the sale agreement is subject to higher or better bids from other potential purchasers.
To facilitate the sale process and address its debt obligations, the company has filed petitions for a court supervised voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code. The company has also obtained $677.5 million in DIP financing, with $265 million committed by KPS and the remaining $412.5 from the Company’s existing group of ABL lenders. Following court approval, the DIP facility will ensure that the company has sufficient liquidity to continue normal operations and to meet its financial obligations during the Chapter 11 process, including the timely payment of employee wages and health benefits, continued servicing of customer orders and shipments, and other obligations.
This process will allow the company to ensure the viability of its business while providing sufficient liquidity to fully support operations through the closing of the transaction. Briggs & Stratton believes this process will benefit its employees, customers, channel partners, and suppliers, and best positions the company for long-term success. This filing does not include any of Briggs & Stratton’s international subsidiaries.
Todd Teske, Briggs & Stratton’s Chairman, President, and Chief Executive Officer, stated, “Over the past several months, we have explored multiple options with our advisors to strengthen our financial position and flexibility. 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. 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.”
In March, the company announced plans to sell the off the majority of its turf product segment to shift back to a sharp focus on the company’s role in the application of power.
Several significant changes in the industry the previous year impacted Briggs performance including a retail environment complicated by the bankruptcy of Sears, stagnant sales of residential walk-behind mowers and the exit of a significant customers from the consumer business in 2020, including walk-behind and riding lawn mowers.
Net sales in 2019 were reported as $1.84 billion, down 2.4 percent from 2019.
As a result of careful analysis of market dynamics and opportunities, the company’s strategy was to repositioning its focus with expected annual sales of approximately $1.0 billion in the design, production and sale of Briggs & Stratton residential engines, Vanguard commercial engines, standby power generation and the Vanguard commercial battery systems.
Priority was placed on divesting the turf products business headquartered in the U.S. and the pressure washer and portable generator product lines. The turf products business includes premier lawn and garden and turf care equipment sold under the Ferris, Billy Goat, Simplicity, Snapper, and Snapper Pro brands.
Plans were in place to help alleviate some of the debt by the end of 2020.
Briggs & Stratton also sells engines to other manufacturers, including Deere & Co., the Toro Co. and Viking.
Briggs has plants in Wauwatosa, Alabama, Georgia, Missouri and New York as well as Australia and China.
“We have a storied past and a bright future, built on our foundational expertise in applying power. Our portfolio of innovative engines, robust lines of products, and high-performance commercial batteries positions Briggs & Stratton to meet our global customers’ needs for power to get work done, now and in the future,” Teske concluded.