Rank Group lifts debt further for US car parts buy-out

Graeme Hart. Photo / Norrie Montgomery

Local billionaire Graeme Hart will lift the debt component of his proposed buy-out of an American spare car parts firm by almost US$100 million.

Rank Group, Hart's primary investment vehicle, will meet with takeover target UCI International and prospective lenders on January 6 in New York to discuss part of the financing of the deal, the company said in a statement yesterday.

Rank Group plans to fund the acquisition with a US$450 million senior secured term loan - part of a new US$525 million funding line, including a US$75 million revolving facility - and US$250 million of new senior unsecured debt.

That's US$95 million more than the US$605 million worth of debt Rank Group flagged in its November announcement that it would buy the car parts firm.

Hart's vehicle will also put up about US$320 million of equity and cash on to UCI International's balance sheet, down from the US$375 million flagged in the initial announcement.

The Rank deal scuppers a proposed float on the New York Stock Exchange to raise working capital and repay UCI International's debt. Private equity firm Carlyle Group planned to sell 13.3 million shares at between US$14 and US$16 a share, valuing the company between US$186.2 million and US$212.8 million.

Carlyle bought about 90 per cent of UCI International in 2003 for some US$800 million in cash. Indiana-based UCI International reported annual sales of US$895 million in the year ended March 31, with net profit of US$20.2 million, according to its initial public offer document lodged with the Securities and Exchange Commission in July.

The move into spare auto parts is a new direction for Hart, who has spent the past four years building a global packaging empire worth some US$13.8 billion, culminating in the US$6.5 billion merger of Reynolds Group Holdings and Pactiv Corp.

If the deal falls through, Rank may be required to pay a US$100 million termination fee. It's expected to be completed in the first quarter this year.