DETROIT — Carlyle Management Group once again is in the lead to take over bankrupt Key Plastics LLC, with tentative plans to finalize a company reorganization by the end of March.
While other suitors — including New York-based JJM LLC — still could make a run at buying the automotive supplier out of Chapter 11, Carlyle is the only one who can move quickly, noted Key lawyer Sandra Mayerson during a Feb. 6 hearing at the U.S. Bankruptcy Court in Detroit.
"There is only one bidder who has done due diligence, is still expressing an interest and has the financing in place," Mayerson said. "Anyone else would be several months behind the curve, and we don't have several months at this point."
If the deal comes off as planned, it will mean the molder will spend almost exactly a year in Chapter 11. It filed for protection on March 23, 2000. Key tentatively is slated to complete a deal March 28.
The new plan would reorganize Key under Carlyle's ownership rather than auctioning off the assets. That will provide "some value" to unsecured creditors, but bankers are not as happy with the arrangements, Mayerson noted. She would not provide details on the proposal but said it is "well within" the company's market value.
"We have a very good company here that we don't want to see go down the tube," Mayerson said.
Key molds interior, exterior and under-the-hood parts for the auto industry in North America and Europe, with more than 30 facilities in nine countries. The Novi, Mich.-based company listed about $500 million in sales in 1999 and 2000.
In December, Carlyle had emerged as the front runner to buy Key, with a total bid package worth about $188 million. But Carlyle pulled that offer off the table in January and presented a new offer with different terms.
"Carlyle remains vitally interested in acquiring the company," said Carlyle lawyer David Heller. "We are millions of dollars involved into this case already."
Carlyle Management is based in Dallas. Carlyle Group, its parent company, is based in Washington.
By early February, most concerned parties had signed on to the revised proposal, but representatives from primary lender Bank One Corp. still had not given full approval. The bank has reached "significant consensus" to the terms, however, noted Bank One lawyer Steven Howell.
Speed is a factor in turning over the assets. Key originally had funding in place to continue operations through the end of December. It has received extensions to that funding but also has relied on financial support from its major customers. Representatives from General Motors Corp., DaimlerChrysler AG, Visteon Corp. and LDM Technologies Inc. all sat in on the hearing.
Those customers all have guaranteed funds to Key to ensure continued operations but want to resolve the sale as quickly as possible.
"We believe strongly that time is of the essence," said Robert Weiss, a lawyer representing Detroit-based GM. "We want a fast-track plan on the reorganization."
Key reported $353 million in debt and $331 million in assets when it entered Chapter 11.