Propeller manufacturer Michigan Wheel Corp., of Grand Rapids, Mich., filed a voluntary Chapter 11 bankruptcy petition this week so it could proceed with a planned asset sale to The Anderson Group, a Michigan-based investment firm.
"We expect to emerge [from bankruptcy] in 40 to 60 days, so it's a restructuring," Stanley J. Heide, Michigan Wheel president and CEO, told Soundings Trade Only.
The downturn in the recreational marine market has had a "substantial negative impact" on Michigan Wheel's business and been a "substantial strain on cash flow," according to court documents.
In February 2008, the company began seeking an investor that could provide sufficient working capital to continue operations, according to documents filed in U.S. Bankruptcy Court for the Western District of Michigan. After a 16-month search, the manufacturer found The Anderson Group of Bloomfield Hills, Mich.
Michigan Wheel Operations LLC, subsidiary of The Anderson Group, has agreed to serve as the "stalking horse bidder" for the manufacturer's quality castings division in Waukesha, Wis., and its Michigan Wheel European division in the United Kingdom.
"In The Anderson Group, we have identified a committed financial partner for Michigan Wheel who is willing to invest in the long-term growth of our business and who is willing to provide the business with the capital necessary to allow us to better serve our customers in the future," Heide said in a statement.
Heide said the company's decision to file for Chapter 11 was based on substantial secured debt, legacy costs related to ongoing pension obligations, and the impact that fuel prices and the recession have had on the recreational boating industry.
The company has $12.3 million in assets and $14.9 million in liabilities, according to court documents.
With the decline in sales volume, Michigan Wheel recently closed its Canadian prop manufacturing operation, Hall & Stavert, located on Prince Edward Island, and consolidated these operations with the Grand Rapids facility. A separate line of marine hardware made at Hall & Stavert will remain open and will continue to service customers during the transition.
Heide said the company filed numerous first-day motions with the court to support its employees, vendors, customers and stakeholders throughout the bankruptcy proceedings.
"It is vital to our restructuring plan that we continue to solicit and fulfill the product requirements of our customers," said Heide.
— Melanie Winters