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December 12, 2024, 11:12 AM
On December 12, it was reported that American Tire Dealers Corporation (ATD), the largest independent tire wholesale distributor in the United States, made new progress in its bankruptcy protection process, reaching a so-called "stalking horse" asset purchase agreement with a group of credit funds and accounts controlled by four equity companies. It is reported that the company's sales in 2023 will reach US$5.7 billion.
The lenders participating in the agreement include Guggenheim Partnership Investment Management Limited, KKR, Monarch Alternative Capital Limited Partnership and Silver Point Capital Limited Partnership, which together form the Provisional Lenders Group. The "stalking horse" agreement sets a benchmark price for the company's assets, which will be used as the starting price in subsequent court auctions. If no higher offer is available, the "stalking horse" bidder will make a binding takeover offer. This practice stems from a tradition in hunting and is intended to protect debtors 'assets from low-priced auctions and ensure that "stalking horse" bidders receive certain incentives, such as expense reimbursement and break-up fees, to promote the smooth progress of transactions.
According to the Carbon Black Industry Network, the U.S. Bankruptcy Court in Delaware approved the auction process for the sale at a hearing on November 26 and clarified the relevant time points. The deadline for submission of objections is December 27, and the auction will end at 11:59 pm (EST) on January 10, 2025. If needed, the auction will be held at 10 a.m. on January 13. The successful bidder will receive notice on January 13, while any objections to the sale must be filed by January 14. A sale hearing will be held at 2 p.m. January 16.
In a filing with the bankruptcy court, Moelis & Co. L.L.C. Managing Director Rachel Murray said the auction process aims to encourage potential buyers to submit offers within a specified time in a fair and competitive manner to maximize asset value in the current environment. Murray also pointed out that after the auction, the debtor will evaluate all offers and select the offer with the highest bid or best terms, which is in the best interest of the debtor's estate.
The debtors involved in this bankruptcy case include American Tire Dealers Company and several of its subsidiaries. American Tire Dealers emphasized that the company will maintain normal operations throughout the sale process. According to the asset purchase agreement, all of the company's assets will be acquired through a credit offer for some of its financially backed debts, and will also bear trade payables and other debts arising after filing for bankruptcy protection. The move is expected to reduce the company's debt by $1.3 billion and significantly improve its operating flexibility. During this period, the company may also consider other third-party offers in accordance with court-approved bidding procedures.
