Briggs & Stratton given time to raise additional money Equipment company tries to avoid bankruptcy
Briggs & Stratton Corp., a century-old company that is the world’s largest producer of small gasoline engines used in outdoor power equipment, now has until Sunday to raise additional money and avoid having to seek protection in bankruptcy court.
The company, based in Wauwatosa, previously had until Wednesday to make a $6.7 million interest payment. Missing the payment would have violated the terms of its loan agreements, giving a consortium of banks the right to demand immediate repayment.
On Tuesday, the banks, led by JPMorgan Chase, agreed to give Briggs until Sunday to raise additional money, according to documents filed late Wednesday with the U.S. Securities and Exchange Commission.
Briggs is continuing to negotiate with the banks to find a way to raise the money needed to help the company get through the economic downturn brought on by the coronavirus pandemic.
The company warned in the SEC filing that there can be no assurance that it will be able to reach an agreement, which would result in a bankruptcy filing.
The brief reprieve may have been granted to give the company time to work out the final details of a pending bankruptcy filing.
The filing on Wednesday includes a presentation prepared for Briggs’ lenders in June that suggests the company is considering a bankruptcy filing in which a so-called stalking horse bidder would make an initial bid on the company’s assets.
Reorg, a financial research firm, reported on Monday that Briggs planned to file for Chapter 11 and that its filing would include a $550 million bid from KPS Capital Partners, a private equity firm, for the company’s assets.
Under Chapter 11, a company and its creditors work out a reorganization plan that enables the business to continue to operate.
Harvard Zhang, a senior reporter for Reorg, said the bankruptcy filing could happen Sunday night.
“They are preparing to file,” he said. “It’s just a matter of when.”
Tom Hayes, an analyst with Northcoast Research, said the reprieve of only a few days for Briggs to raise money could suggest that the company is working on a pre-packaged bankruptcy filing.
If Briggs was close to an agreement with its creditors or the sale of assets, Hayes said, the banks would not have set the Sunday deadline.
The company’s stock closed Thursday at 82 cents a share, up 3.9 cents. It traded at close to $10 a share a year ago and as high as $27 a share in January 2018.
Briggs, which has 1,363 employees and several hundred contract workers in the Milwaukee area, was working to restructure its operations and reduce its heavy debt load when the pandemic hit.
The company lost $54.1 million in its fiscal year ended June 30, 2019 and $11.3 million in its 2018 fiscal year.
The company — which had $1.8 billion in revenue in its 2019 fiscal year — had short-term debt of $597.5 million and long-term debt of $7 million as of March 31.
Briggs makes small engines, residential and commercial lawn and garden equipment, portable generators, pressure washers, snow throwers and other outdoor power equipment. The company’s products are sold in more than 100 countries under such brands as Briggs & Stratton, Victa, Simplicity, Ferris, Billy Goat, Vanguard, Branco and Allmand.
It also sells engines to other manufacturers, including Deere & Co., the Toro Co. and Viking.
Briggs — which employed an average of 5,251 people companywide in its 2019 fiscal year — has plants in Wauwatosa, Alabama, Georgia, Missouri and New York as well as Australia and China.