TORONTO — A Toronto investment firm has signed a letter of intent to acquire control of financially troubled automotive parts maker JPE Inc. of Ann Arbor, Mich.
DGI Investments Inc. expects to complete due diligence of JPE by mid-November, JPE said in an Oct. 7 news release. It has agreed to pay US$10 million in cash and a special payment of $1.25 per share for JPE stock. JPE has 4.6 million shares outstanding.
The deal is subject to several conditions, including approvals from JPE creditors and customers, and requirements under Chapter 11 bankruptcy proceedings for JPE subsidiaries Starboard Industries Inc. and Plastic Trim Inc.
DGI is an acquisition-oriented firm owned by Chinese investors, according to David Mack, president of Falcon Group Inc. in Southfield, Mich. Falcon is a consulting company that helps offshore investors make acquisitions in North America and is working closely with DGI on JPE and other deals, Mack said in a telephone interview.
DGI particularly is interested in JPE's position as an aftermarket auto parts producer through its subsidiary Dayton Parts Inc. of Harrisburg, Pa. Mack said JPE has ``excellent management'' and a good core business that could use an influx of capital.
He said DGI's offer does not include JPE's injection molding operations in Kitchener and Peterborough, Ontario, because they are in receivership. DGI might bid to acquire them separately, he said. JPE has been looking for a buyer of all its operations. The Canadian plants continue to operate, said JPE Chief Operating Officer James Fahrner.
Last month, Plastic Trim of Dayton, Ohio, and Starboard of East Tawas, Mich., separately filed for protection under Chapter 11 of the U.S. Bankruptcy Code. They extrude and injection mold plastic parts, mainly for General Motors Corp. and Chrysler Corp.
JPE also owns lug-nut supplier Industrial & Automotive Fasteners Inc. of Royal Oak, Mich.
JPE said two of its directors, John Daly and Donald Mandich, have resigned from its board. Richard Eidswick, a managing director of financial adviser Arbor Partners of Ann Arbor, was appointed a director.