Hart looks to shed US car part interests
GRAEME HART, whose packaging conglomerate made him New Zealand’s richest man, is in the early stage of exploring options for his US auto parts businesses.
He bought the businesses, based in Illinois, for nearly US$2 billion (NZ$2.3b) in 2011, according to people familiar with the matter.
A potential sale of the US vehicle replacement parts providers underscores Hart’s efforts to pay down debt accumulated through the buyouts in the last few years that built his industrial empire, Rank Group.
Financial statements disclosed to the US Securities and Exchange Commission reveal UCI has been working to cut costs amid sluggish sales.
It this month closed a factory in York, South Carolina, with the loss of 232 jobs.
When the closure was announced two weeks before Christmas, UCI vice-president Keith Zar told local media there was an oversupply in the market for its filters.
York County Council chairman Britt Blackwell said the effect on employees was devastating.
‘‘I’m sure our economic development head will do everything they can to put another company into that building.’’
As well as the York plant, UCI has stopped production in China and Mexico. Job cuts are planned in its fuel delivery systems production.
In the three months to March UCI reported a loss of US$12.5 million (NZ$14.2m), deepening from a US$7m loss the quarter earlier.
Earnings have declined in each of the last four quarters.
Rank’s other auto parts business, Fram Group Holdings, does not report results.
Rank has spoken to investment banks in recent weeks about potentially selling both companies, the sources said.
Rank acquired UCI for US$980m from private equity firm Carlyle Group in 2011, and Fram Group, the former automotive consumer products business of Honeywell International, for US$950m the same year.
UCI chief executive Bruce Zorich declined to comment, while Rank and Fram representatives did not respond to requests for comment.
The companies may attract interest from some of their peers as falling prices and lower profit margins have increased consolidation in the highly fragmented car parts aftermarket.
Private equity firms also have invested in the sector before.
UCI supplies a range of filtration products, fuel delivery systems and vehicle electronics products for the automotive aftermarket. Its brands include Airtex, Wells, ASC and Champ.
The Lake Forest, Illinois-based company had a full-year net loss of US$12.2m in 2013, down from a profit of $14.6m in 2012, according to its financial statements.