NEWPORT, Tenn.—A substantial portion of the assets of Ace Products L.L.C. has been sold to a New York investment group following the unexpected withdrawal of funding from its prime lending source and near closure of its plants.
A private equity affiliate of Angelo, Gordon & Co. said on July 19 it had purchased most of the business from Radius Equity Partners L.L.C., which owned Ace. The firm´s first order of business will be to properly capitalize the new company.
The acquired assets of the manufacturer of non-automotive tires will make up newly formed Ace Industries L.L.C. and the Ace Products name will be dropped, according to Jeff Krajacic, president and CEO of the new firm.
The company said its factory in Lineville, Ala., and subsidiary, Urethane International L.L.C. in Alpharetta, Ga., reopened operations after their annual off-season shutdown.
It did not say what will happen to its factories in Newport, where Ace is headquartered, and Conneautville, Pa. "The transaction just closed and our owners are in dialogue with customers," Krajacic said.
He said the company is "undertaking a capital restructuring due to the disproportionate level of debt from its previous senior lender."
Under the agreement, the new company will eliminate about $30 million of Ace´s prior senior debt and add new equity and sufficient working capital to effectively operate the business. Angelo, Gordon has more than $10 billion under management. "Our balance sheet will be a wonderful thing," Krakacic said.
Details of the transaction began to leak out July 18 following three weeks of bad news at the maker of semi-pneumatic tires, foam-filled tires, tire/wheel assemblies and other products.
Ace notified its workers at all facilities June 29 it would close its plants immediately because the firm´s lending company, General Electric Capital Corp., told Ace June 26 that within the next 48 hours it no longer would finance the business.
In a posted notice, the firm said Ace´s facilities were being shut down because the company lacked the finances needed to support them. All four plants were in their annual shutdown when the notice was posted.
The announcement caught the United Steelworkers union, which represents workers at two sites, by surprise, according to John Herron, sub-district director for the USW in District 9.
The situation was unanticipated, the firm said, and it wasn´t able to provide prior notice. Ace said it was trying to secure other equity and financing commitments.
Local newspaper and television reports began to circulate that the company had closed.
However, on July 18, all that began to change. When reached in Newport, John Covelli, the company´s interim chief operating officer, said reports that Ace would close were not true, even though the closure notice had been posted.
The next day, the equity group announced it had purchased most of the assets of Ace.