NEW YORK, April 15, 2003 - Castle Harlan, Inc., the New York merchant bank, and Advanced Accessory Systems, LLC, (AAS) the leading manufacturer of automotive roof racks and towing systems in North America and Europe, announced today that a private-equity investment fund organized and managed by Castle Harlan has acquired AAS with management in a transaction valued at approximately $260 million.
Two-thirds of AAS's sales are to original equipment manufacturers in North America and Europe and one-third to the aftermarket. Customers include all of the major automotive companies. AAS is based in Sterling Heights, Michigan, and has 18 manufacturing facilities throughout North America and Europe.
The company had been owned by JPMorgan Partners, the private-equity arm of J.P. Morgan Chase & Co., which purchased AAS along with management in 1995.
The company's roof rack division, SportRack Automotive, has the leading market share in North America and a growing presence in Europe. The company's European subsidiary, Brink International, is the largest supplier of towing systems in Europe, and its Valley Industries subsidiary is the second largest in North America.
"This is an outstanding company with a strong presence in its marketplace," said Marcel Fournier, the Castle Harlan managing director who led the negotiations for the transaction.
"It has widely respected brand names, experienced and effective management, and a dedicated and skilled labor force. We at Castle Harlan are confident that AAS will continue on its solid growth path."
Fournier said Castle Harlan was "pleased that current management will be our partner and continue to hold equity in the company."
Terence Seikel, AAS president and chief executive officer, welcomed the Castle Harlan investment.
"Castle Harlan over the years has shown itself to be a strong, supportive partner to the companies it acquires," he said, "and it has a clear record of promoting their growth and building their value. We are looking forward to continuing to serve our customers and grow our business as a member of the Castle Harlan team."
The company had revenues of $328 million and earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for certain non-recurring items, of $46.6 million in the year ended December 31, 2002.
Donald Hofmann of JPMorgan Partners said, "We've enjoyed a great relationship with the management team at AAS and believe the company will continue to grow and create value for its new equity partners at Castle Harlan."
AAS is a privately held company with $125 million principal amount of outstanding 9 3/4% senior subordinated notes due 2007, series A and series B. Concurrently with the acquisition, AAS announced that it has completed a covenant defeasance for its outstanding notes pursuant to the indenture, dated as of October 1, 1997, by and among the issuers, the guarantors named therein and Wachovia Bank, National Association (as successor to First Union National Bank as "trustee"). Pursuant to the covenant defeasance as well as the redemption described below, AAS has deposited in an irrevocable trust with the trustee enough funds for the redemption of the notes. In addition, AAS has exercised the option for early redemption, and the trustee on AAS' behalf has called all of the notes for redemption on May 16, 2003 (the "redemption date"), at the price of 104.875% of the principal amount thereof, plus accrued and unpaid interest thereon to the redemption date. The notes will cease to be outstanding on the redemption date.
The AAS transaction represents the first acquisition by Castle Harlan Partners IV, L.P., Castle Harlan's fourth private-equity investment fund.
Castle Harlan was founded in 1987 by John K. Castle, former president and chief executive officer of Donaldson, Lufkin & Jenrette, the investment banking firm, and Leonard M. Harlan, founder and former chairman of The Harlan Company.
Since its founding in 1987, Castle Harlan has completed acquisitions exceeding $5 billion. Its portfolio companies include Associated Packaging Technologies, the country's leading manufacturer of CPET containers for the frozen food industry; Morton's Restaurant Group, owner of the Morton's of Chicago steakhouses; and American Achievement Corp., producer of class rings under the Balfour and ArtCarved labels, college and high school yearbooks and other similar academic and scholastic materials.
JPMorgan Partners, formerly Chase Capital Partners, is a global partnership and a leading provider of private equity since its inception in 1984. JPMorgan Partners' primary limited partner is J.P. Morgan Chase & Co. (NYSE: JPM), one of the largest financial institutions in the United States.