Business

Weld Wheel Industries is the largest manufacturer of aluminum racing wheels in the world, with revenues in excess of $50 million. Weld manufactures and distributes forged aluminum wheels in racing and specialty vehicle markets.

Client Objective

Several initiatives to grow the business and expand capacity had significantly increased the Company’s leverage. Failures in execution combined with changes in the environment, rising gas prices, diminished SUV sales, reduced revenues and resulted in operating losses and a negative $2.5 million cash flow. White Oak Group was engaged to explore strategic alternatives including a recapitalization or sale of the business.

Results

A targeted marketing effort among more than one hundred strategics and private equity sponsor groups developed substantial competitive interest and resulted in multiple qualified proposals. The Company signed a purchase agreement with a stalking horse buyer and entered into a Chapter 11 proceeding in order to complete the transaction through a Section 363 sale. Five weeks after filing Chapter 11 the Company was sold in a spirited auction to a strategic buyer for a purchase price valued at $25 million, an increase of $9 million over the negotiated purchase price. This additional transaction value greatly enhanced the outcome for stakeholders.

Acquirer

American Racing Equipment, Inc., a Platinum Equity company, will integrate Weld’s operations under the Weld brand and continue to manufacture wheels at Weld’s Kansas City facility. More than three hundred Weld employees and managers joined the successor company.

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