Wheel Pros (d/b/a Hoonigan) and certain of its North American-based affiliates, a provider of aftermarket vehicle enhancements, commenced an in-court financial restructuring process to position it to drive long-term growth. The company has entered into a restructuring support agreement (RSA) with a majority of its debtholders through which it expects to eliminate approximately $1.2 billion of the company’s debt and secure up to approximately $570 million of new capital, substantially improving the company’s balance sheet and financial position.
“Today’s announcement marks an important step forward for Hoonigan that will enable us to advance our industry leading position in the growing automotive aftermarket sector,” Vance Johnston, CEO of Hoonigan, said. “With a significantly strengthened balance sheet and new capital, this transaction will position us to invest in innovation and further drive financial performance. With the strong support of our financial partners, we remain laser-focused on providing cutting-edge products and best-in-class service to our partners throughout this process.”
In order to implement the RSA, Hoonigan has filed voluntary petitions for Chapter 11 relief in the U.S. Bankruptcy Court for the District of Delaware. As contemplated under the RSA, the company expects to emerge under the majority ownership of a group of its current lenders. The RSA contemplates a swift in-court restructuring, with emergence from Chapter 11 anticipated within two months.
Importantly, the RSA provides for a consensual, prepackaged restructuring proceeding, including a motion seeking to approve $110 million term loan debtor-in-possession (DIP) facility and a $175 million ABL DIP facility. According to related chapter 11 filings, Wells Fargo served as the administrative agent and collateral agent for the ABL lenders.
The company anticipates that this will allow the business to continue operating in the ordinary course during the restructuring without impacting trade creditors, customers, employees, vendors or suppliers and will allow the company to honor its commitments to strategic partners. Further, the company’s operations outside of North America are not part of the court-supervised restructuring process.
Kirkland & Ellis and Pachulski Stang Ziehl & Jones are serving as legal counsel, Houlihan Lokey is serving as investment banker, Alvarez & Marsal is serving as financial advisor, and C Street Advisory Group is serving as strategic communications advisor to the company.
