DETROIT - Venture Holdings Trust, the parent company of automotive molder Venture Industries Corp., launched a $59 million stock tender offer June 11 for Bailey Corp. of Seabrook, N.H., another molder. The Venture acquisition plan was approved unanimously by Bailey's board of directors a week earlier. At the same time, Venture completed the takeover of financially strapped AutoStyle Plastics Inc. in a Grand Rapids, Mich., bankruptcy court.
Venture's takeover of the AutoStyle business, arranged with the help of General Motors Corp., is structured as a factory lease agreement with an option to purchase the company's assets in two years.
The acquisition of Bailey and the addition of the AutoStyle bumper fascia business could roughly double the size of Venture, an injection molder of interior and exterior components with sales of $251 million last year.
Venture Industries has seven plants in the United States and Canada and an affiliate in Australia. Based in Fraser, Mich., Venture employs 2,200. It has various affiliate companies involved in mold making, equipment leasing, parts assembly, sales, management services and real estate.
In Bailey, Venture acquires a company that injection and compression molds exterior and under-the-hood vehicle parts. Venture, which has GM and Chrysler Corp. as its largest customers, also improves its position at Ford Motor Co., the largest customer at Bailey.
AutoStyle makes reaction injection molded polyurethane bump-er fascia, a thermoset product that has seen declining use in recent years as automakers have shifted to injection molded thermoplastic on many models. The TP fascia is considered cheaper and easier to recycle.
AutoStyle, which pegged its sales last year in the range of $55 million to $60 million, unsuccessfully has sought to sell its business in recent months. Facing what it called certain liquidation, the firm announced May 21 that it planned to file for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code and phase out production by mid-July.
But when AutoStyle filed its Chapter 11 petition June 3, it disclosed a proposed agreement under which Venture would take over its factories and complete the terms of a GM supply contract with two years to run. Under the agreement, Venture would lease AutoStyle's plants in Grand Rapids and Hopkinsville, Ky., for $500,000 per month and retain the option to purchase the company's assets at the end of the two-year period.
Venture also promised to hire all of AutoStyle's 950 employees. The plan was approved June 7 by U.S. Bankruptcy Judge JoAnn Stevenson.
According to a report in the Grand Rapids Press, AutoStyle President R. Dail Herman testified in bankruptcy court that the firm lost $12.7 million last year and was facing an additional loss of $6 million to $7 million this year.
The paper also said that GM purchasing manager Russell Brewster testified that his company, which endorsed the AutoStyle takeover, helped the deal by granting price increases to Venture for the parts it would produce at AutoStyle plants.
In its bankruptcy petition, AutoStyle listed assets of $55.4 million and liabilities of $100.1 million. AutoStyle is a sole-source supplier of exterior parts to GM luxury-car assembly plants in Hamtramck and Flint, Mich. GM told Plastics News it was confident that Venture's assumption of AutoStyle's production contracts would prevent any shutdown of assembly operations.
In making its case with the court, AutoStyle claimed its liquidation would cause wholesale disruptions of GM assembly operations and make it liable for damages of $9 million per day from the automaker.MascoTech Inc. of Taylor, Mich., owns 50 percent of AutoStyle.
Financial weakness also has been the case at Bailey, which has watched its stock price skid during the past two years. The company reported net losses in fiscal 1995 and for the first six months of fiscal 1996. For the six-month period ended Jan. 28, Bailey reported a loss of $6.2 million on sales of $80 million.
Bailey is projecting total 1996 sales of $172.4 million and 1997 sales at $206.4 million.
In a filing with the Securities and Exchange Commission last week, Bailey said it has been holding talks with potential acquirers for the past two years.
In November, Bailey and Ven-ture entered into a joint engineering agreement for certain products, and this led into gradually more detailed discussions about a possible acquisition by Venture.
The acquisition talks involved a number of Venture executives, including Chairman and Chief Executive Officer Larry J. Winget, President and Chief Financial Officer Michael Torakis, and Al Young, sales manager for the Ford account. Bailey executives included Roger R. Phillips, who holds the titles of chairman, CEO and president, and Phillip J. Kusky, executive vice president and chief operating officer.
Winget was one of five founders of Venture Industries Corp. and the only original partner still involved with the company. In 1981, he bought out three of the stockholders, boosting his total interest in the firm to 60 percent.
Winget acquired the remaining 40 percent in 1987. He is the sole beneficiary, or owner, of the parent Venture Holdings Trust.
Venture Industries produces a range of products, including instrument panel parts, air bag covers, window moldings, body side moldings and bumper fascia. In all, the company said it made about 460 components for more than 50 vehicles in the 1995 model year.
Venture has shown strong sales growth in recent years by adding design and engineering services, holding down costs and focusing on larger, luxury-car models and the high-growth sport utility and minivan market segments.
From 1988-92, Venture said its sales grew at an annual compounded rate of 17.6 percent despite an overall decline in car and light-truck shipments by the Big Three during the period.
The firm has recorded a profit every year since 1988, and reported 1995 profit of $4.14 million.