Here’s what you need to know:
- First Brands and PGI Northstar, backed by aftermarket company Premium Guard Inc., have reached a deal for it to buy filtration, wiper and other brands from First Brands' line-up.
- The deal is worth $25 million, plus an additional $8 million in payments over time, and assumption of other liabilities.
- It includes intellectual property and some of the companies' contracts. It isn't a deal to buy a whole going concern. Many of these production lines are stopped or running on a very limited basis.
First Brands has reached a deal to sell intellectual property for its filtration and spark plug, wiper blade and lift businesses for $25 million.
The buyer, PGI Northstar LLC, a Delaware LLC backed by Premium Guard Inc., maker of aftermarket solutions such as Premium Guard filters, ECOGUARD filters, PWR Steer, PUREFLOW cabin air filters, Silblade wipers, HIGHFLOW engine air filters, 5Micron oil filters, Premium Vision wiper blades and more.
PGI will purchase intellectual property and assets for:
- FRAM, Luber-finer, PetroClear, Autolite, Champ and Champion Lab filtration and components; precision-molded rubber, thermoplastic and elastomer components for vibration and structural control, sealing, isolation and fluid management; and spark plug and ignition products.
- Trico, Anco and ExactFit wiper blades.
- Strongarm, Mighty Lift and AVM lift support products.
The sale price is $25 million, plus additional payments of 1.25% of net sales during each quarter, not to exceed $8 million; and assuming some related liabilities.
None of the lines are operating in the wake of First Brands' collapse, and, according to a court filing, the company doesn't believe it will get a better offer. During the marketing process, it says it didn't receive any bids for the wiper business as a going concern, and the filters, plugs and lift businesses didn't garner much interest.
"It quickly became clear that going-concern sale transactions would not be achievable for those business units for a variety of reasons," a request for an emergency sale order reads, and OEMs and other customers found new sources to satisfy their supply needs.
Instead, PGI and First Brands began negotiating for the intellectual property behind these brands, including the transfer of some contracts to a new business. The deal must close by April 17, the filing says, and any time beyond that would further decrease the value of the property.
"These business lines have either been non-operational or running at a reduced capacity for several weeks and have now ceased further operations," the filing says. "Unfortunately, the high cost and associated funding requirements for continuing or resuming operations of these business lines have cataylzed key customer departures. With each week that these business lines do no produce product for end customers, the value of the transferred assets — including intellectual property related to brand names — degrades and the ability to successfully monetize them is at risk."
The filing asks for a sale hearing on April 7 before Judge Christopher Lopez in the United States Bankruptcy Court for the Southern District of Texas.
