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First Brands to Sell 12 Brands Including Autolite for $25M
Trico, Fram Oil Filters Also Included
Bankrupt auto parts maker First Brands Group agreed to sell some of its most-recognizable brands for $25 million after losing rescue funding and major customers.
PGI Northstar will also take on certain liabilities related to the 12 brands in the deal — which include Fram, Autolite and Trico — according to court documents dated March 25.
First Brands, which recently had to shut down more factories, had been trying to sell the units while they were still operating. But potential bidders pulled out as orders dried up and the company ran out of cash to keep the businesses open, court documents show.
“Unfortunately, the high cost and associated funding requirements for resuming operations of these business lines have catalyzed key customer departures,” the company said in the filing. A judge must approve the sale before it can close.
First Brands, which shuttered 17 facilities and fired 4,000 workers earlier this year, has been trying to sell its remaining parts-making factories after new managers uncovered widespread fraud and lenders refused to put up enough cash to overhaul the conglomerate.
Its last major business lines have been kept afloat by pre-paid orders from clients like Ford Motor Co. and Honda Motor Co.
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Patrick James arrives at federal court in New York on Feb. 4. (Michael Nagle/Bloomberg)
The deal is the second major agreement since the company began winding down much of its operations. Earlier this month, First Brands agreed to sell the division that makes fuel-control systems for vehicle makers for $50 million.
Any money brought in from the sales would need to be divided among creditors who say they were harmed by the corporate fraud that brought down First Brands last year.
Company founder Patrick James and his brother Edward have pleaded not guilty to various fraud charges and face a criminal trial. The company’s former chief financial officer has pleaded guilty and is set to testify against the brothers.
The case is First Brands Group LLC, 25-90399, US Bankruptcy Court, Southern District of Texas (Houston).
