A favored General Motors Corp. turnaround specialist is about to take control of the automaker's biggest lighting supplier.
Palladium Equity Partners LLC announced Jan. 17 it has reached a tentative agreement to turn over Guide Corp. to Vehicle Lighting Inc., a new company established by B.N. Bahadur.
Bahadur is one of the founders and principals of BBK Ltd. of Southfield, Mich., a consulting company that Detroit-based GM often calls on to help its troubled suppliers.
Vehicle Lighting will operate separately from BBK, said company spokesman Mike Morrison.
"[Bahadur] has been around for a long time, and he's very respected," Morrison said. "He's had a really good track record with GM for a long time."
The companies expect to finalize the deal within a month.
Guide formed in 1998 when New York-based Palladium bought GM's lighting division, with annual sales of about $600 million. It supplies 75 percent of GM's forward and signal lights in North America, with headquarters in Anderson, Ind.
Its 3,100 employees are divided among Anderson; Monroe, La.; Monterrey, Mexico; a technology center in Pendleton, Ind.; and a customer support center in Madison Heights, Mich.
Guide has 300 presses and was the third-largest company in Plastics News' most recent ranking of North American injection molders, based on estimated 1999 sales.
With the purchase, though, Palladium took on a company with extensive financial problems. The division was losing about $100 million annually as a part of GM and had plants and equipment that needed extensive overhaul.
In December, Chairman and Chief Executive Officer Dennis K. Pawley left Guide, saying GM was not paying enough for parts. Price cuts, he said, seriously threatened Guide's future.
The automaker maintained it has lived up to all obligations to Guide and Palladium.
At the time, sources familiar with discussions said Palladium wanted to sell the unit back to General Motors, but negotiations had broken down over a $130 million payment the automaker had fronted Palladium to help with improvements. GM wanted the money back.
Now the pending deal with Vehicle Lighting has the automaker's support.
"We look upon this occurrence here as something that's going to be good for Guide, the employees of Guide and the customers of Guide," said GM spokesman Dan Jankowski. "It's encouraging to have [Bahadur] involved.
"His reputation speaks for itself. With him being involved, that's a good sign."
BBK ran Van Dresser Corp., an instrument panel maker from Westland, Mich., for six months in 1992 before the business was picked up by Textron Automotive Co. Inc. of Troy, Mich.
It also consulted with injection molder Peregrine Inc., which bought some door panel and interior trim operations from General Motors in 1996. Another turnaround specialist, Jay Alix & Associates, eventually took over Peregrine, but its four shops ended up either closed or sold off to other suppliers.
BBK even has won enough respect from GM that the consulting company was named a "supplier of the year" by the automaker in 1998.
It is too early to say what changes Bahadur might make to Guide, beyond expanding its customer reach, Morrison said. About 95 percent of Guide's sales are to its former parent.