Nine Collins & Aikman Corp. injection molding plants are about to get a new lease on life, with a very familiar name in control.
Cadence Innovation LLC announced March 7 that it has signed a letter of intent to buy the plants. Jerry Mosingo, Cadence's president and chief executive officer, formerly was president and CEO of C&A, and before that oversaw C&A's plastics business and molding for Textron Inc.'s automotive trim division - which C&A bought in 2001.
The companies did not disclose which sites are involved in the sale, but said they employ 3,500. The agreement does not guarantee that Cadence will end up with the C&A plants, spread through the U.S., Mexico and Canada, but it makes the firm the lead bidder in an asset auction.
The deal could give Cadence some prime operations, Mosingo said in a March 8 telephone interview. Some of the facilities have won honors as the top manufacturing sites in North America.
``This feels very good, that we can grow faster through this [acquisition] than we were doing with the organic growth alone,'' he said.
Cadence has $665 million in new business booked for 2006-11. That work includes instrument panels for General Motors Corp.'s Saturn Outlook, Buick Enclave and GMC Acadia crossover utility vehicles.
The C&A plants would allow Cadence to build on that business, he said.
``I need [customers] to understand that Cadence will be stable, that we're in it for the long term, that we're going to be here years from now,'' Mosingo said.
The proposed purchase marks a continued shuffling of the fates of Troy, Mich.-based Cadence and Southfield, Mich.-based C&A.
Cadence was created in 2005 out of the remnants of once-bankrupt auto supplier Venture Holdings Co. LLC, with private-equity backing led by Harbinger Capital Partners and Yucaipa Cos. Cadence quickly brought in Mosingo to run the business.
As Cadence was coming into existence, C&A filed for Chapter 11 protection in U.S. Bankruptcy Court in Detroit. The company now is selling off its holdings.
Harbinger and Yucaipa have continued to support Cadence, Mosingo said, recently providing an extra $50 million in financing. The company plans to pay for the C&A purchase through external debt financing and increased equity by existing shareholders.
Despite its troubles, C&A has some strong products, including instrument panels, that will be ``very good'' for someone, said Jim Gillette, director of supplier analysis for CSM Worldwide, a Northville, Mich.-based consulting group. ``Cadence is probably a good fit for that business.''
And Cadence offers something that other private-equity backers do not have, said Jeff Mengel, a partner with Southfield, Mich.-based consulting group Plante & Moran PLLC: an experienced team that includes key executives with a solid history in the auto supply industry.
``They certainly have a team in place to handle the size of an entity that would include C&A and Cadence,'' he said. ``It's well-structured to handle a lot more mass than they have been.''
Customers know the company's team, he said, and so do suppliers and employees.
Mengel warned that if the deal goes through, it will not be a complete repeat of the Textron or C&A experiences. He expects the firm to do some restructuring, and Cadence has a different structure as a private company. But it may offer the mix that automakers want to ensure long-term stability.
``In my mind, this is a lot less risky than having private-equity money come in that doesn't have the manufacturing experience,'' he said.