DETROIT — The future of injection molder Key Plastics LLC is back up in the air. One bidder has amended its offer to buy the company's assets out of Chapter 11, while negotiations with other bidders have restarted.
An auction of the automotive supplier's holdings was set for Jan. 25 in Detroit, with a U.S. Bankruptcy Court judge expected to approve the sale the following day. But the auction was canceled and Key now is negotiating with three potential buyers.
Meanwhile, Key told employees at its South Bend, Ind., site earlier this month that the factory will close sometime in March. The plant has about 200 workers.
Key has 34 plants in nine countries throughout North America and Europe. Executives for Key were not available to comment.
After the Jan. 25 auction was canceled, Key's Detroit lawyer met with representatives of three bidders into the night, but could not come up with an agreement.
"We're not there yet. We might be there soon, but not yet," Key lawyer Sandra Mayerson said in court on Jan. 26.
One bidder is Carlyle Management Group of Washington, which had won a two-company contest in December to become the preferred bidder for Key. Carlyle had beat out New York-based investment group JJM LLC.
Carlyle had proposed a total package worth about $188 million, but the company terminated that offer on Jan. 11 and proposed new terms the next day, Mayerson said.
According to sources familiar with the negotiations, Carlyle decided its first bid was too high after having further opportunities to review Key's holdings and operations. Carlyle wanted to reduce its offer by several million dollars, the sources said.
Key's negotiators responded by bringing JJM back into the discussion, sources said.
Carlysle still is "vitally interested" in buying Key, according to a representative of Carlyle. Mayerson did not identify the other two bidders, although one is likely JJM.
Carlyle and JJM are financial investors that have operated troubled manufacturing businesses in the past. Carlyle is part of Carlyle Group, which manages 182 companies. JJM is run by Joyce Johnson-Miller, who has worked extensively with New York-based buyout firm Cerberus Partners LP.
Before the scheduled Jan. 25 auction, executives for Key and Carlyle had signed in with Dykema Gossett PLLC, Key's Detroit law firm. So did Johnson-Miller and her consultants, plus representatives for Key customers including DaimlerChrysler AG and Visteon Corp.
The court has scheduled a status meeting on the negotiations for Feb. 6, at Key's request. Meanwhile, Key needs to work out a new financing deal, because its current emergency financing agreement expires Jan. 31.
Key entered Chapter 11 bankruptcy protection in March, listing $353 million in debt and $331 million in assets. The company sells about $500 million worth of auto parts annually, including interior and exterior trim and under-the-hood parts.