Metaldyne term lenders object to powertrain sale bid procedures

By Jennifer Lanning Drey

Portland, Ore., June 23 - Metaldyne Corp.'s pre-bankruptcy term lenders objected to the bidding procedures related to the proposed $100 million sale of the company's powertrain group, according to a Monday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The lenders said the bid procedures fail to encourage competitive bidding from bidders other than stalking horse bidder RHJ International, SA, which holds about 60.1% of the outstanding capital stock of Metaldyne's indirect parent, Asahi Tec.

Specifically, the lenders said the bid procedures require competing bids to be at least $3 million higher than the RHJI bid, which they said was already artificially inflated by "tens of millions" of dollars.

In addition, they said the bid procedures include an "impossible" timeline for bidders other than RHJI to close a transaction and mandate that other bidders must close on the purchase of the U.S. assets even if regulatory approval has not yet been obtained.

The lenders also argued that the proposed $2 million break-up fee is unnecessary because as Metaldyne's equity sponsor, RHJI would bid in the process regardless of whether a break-up fee was included.

The lenders said they had also expressed interest in the assets, but the company showed no willingness to engage in substantive discussions with other parties.

As previously reported, Metaldyne has valued the proposed transaction with RHJI at $100 million, including up to $25 million in cash, a new $50 million secured note and the exchange of an existing €15 million demand note issued by Metaldyne GmbH for a term loan to RHJI's newly formed acquisition subsidiary.

A hearing on the bid procedures is scheduled for June 24.

Metaldyne, a Plymouth, Mich.-based maker of metal-based components, assemblies and modules for transportation-related powertrain and chassis applications, filed for bankruptcy on May 27. The Chapter 11 case number is 09-13412.

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