Shiloh Industries, an environmentally-focused global supplier of lightweighting, noise and vibration solutions, entered into a stalking horse stock and asset purchase agreement with Grouper Holdings, a subsidiary of MiddleGround Capital, pursuant to which Grouper will acquire substantially all of the company’s assets, including the equity interests of certain of the company’s direct and indirect subsidiaries for an aggregate consideration of $218 million in cash, subject to working capital and net debt adjustments, and assumption of certain liabilities of the company.
To facilitate the transaction process, Shiloh Industries and certain of its U.S. subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. MiddleGround, via Grouper, will serve as the “stalking horse bidder” in a court-supervised auction and sale process. Accordingly, the proposed transaction with MiddleGround is subject to higher or otherwise better offers, court approval and other customary conditions. Shiloh Industries’ operating entities outside the U.S., while included in the agreement with MiddleGround, are not part of the court-supervised process, and its operations in Asia, Europe and Mexico are expected to continue as normal.
Shiloh Industries’ operations will continue throughout the sale process. In conjunction with the proposed sale transaction, Shiloh Industries received a commitment for $123.5 million in debtor-in-possession financing from its existing lenders, consisting of an approximately $23.5 million new money sub-facility and a rollup of approximately $100 million of commitments under the company’s existing revolving credit facility. Upon court approval, this new financing, combined with cash generated from the company’s ongoing operations, is expected to be used to support the business throughout the sale process as Shiloh continues to take steps to address the ongoing challenges related to OEM production shutdowns due to COVID-19 that have affected the automotive sector in recent months.
In conjunction with the Chapter 11 filing, Shiloh Industries filed a number of customary motions with the court seeking authorization to continue supporting its operations during the court-supervised sale process, including authority to continue payment of employee wages and benefits without interruption and to honor customer commitments.
“MiddleGround’s interest in Shiloh is a testament to the value they see in the highly competitive and universally innovative solutions we provide to our customers, driven by our hardworking, dedicated team,” Cloyd J. Abruzzo, interim CEO of Shiloh Industries, said. “The decision to enter this agreement with MiddleGround follows a thorough review of the options available to us, and we believe this transaction is the best path forward for Shiloh and all of our stakeholders. We look forward to building on our unique strengths as part of MiddleGround, while improving Shiloh’s financial position for the long term. In the meantime, we continue to work to promote safety and meet customer demand as the automotive industry recovers from the COVID-19 pandemic. We appreciate the support of our customers, partners and above all, our employees as we take these important steps to position Shiloh for the future.”
“Shiloh has a unique and attractive portfolio of innovative, lightweighting products and technologies that enable OEMs to reduce on-vehicle weight without compromising strength, safety or performance,” John Stewart, partner at MiddleGround, said. “Despite recent market conditions, we see tremendous value in Shiloh’s business and differentiated product solutions serving the automotive sector. We look forward to working with the Shiloh team in this new chapter for the company.”
