Carlyle-Owned Auto Parts Maker Enters Bankruptcy
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Tuesday, February 3, 2009
A German auto parts manufacturer owned by Carlyle Group declared bankruptcy yesterday, causing the District-based private-equity giant to lose its $180 million investment, a Carlyle spokesman said yesterday.
The insolvency of Edscha, which manufactures door hinges, convertible roofs and driver controls for major carmakers, follows a 50 percent drop in some of the company's businesses during the fourth quarter of 2008.
"Edscha succumbed to the double-barreled effect of an ailing worldwide economy and a suffering automobile industry," Carlyle spokesman Chris Ullman said.
Carlyle bought Edscha in January 2003 and grew sales from $1 billion in 2005 to almost $1.4 billion in the fiscal year that ended June 2008.
With a collapse in the worldwide automobile market last year, business at Edscha plummeted. Carlyle injected $25 million in December to help see Edscha through the economic downturn, the company said.
Edscha, which was established in 1870, employs about 6,000 people at 29 factories worldwide. The company made parts for several BMW models and Rolls-Royce Phantom Drophead Coupé models, according to Automotive News.
Carlyle has suffered in the current economic malaise along with everyone else.
The company announced in December that it would lay off about 100 members of its 1,000-employee staff, which stretches across 33 offices in 21 countries.
In November, Carlyle closed its Warsaw office and ended financial operations in some Eastern European and Asian markets, which resulted in 18 layoffs.
In December, one of its investments, Hawaiian Telcom Communications, filed for bankruptcy protection.
Last March, Carlyle wrote off a $700 million investment in its Carlyle Capital affiliate.
Despite the slowdown, Carlyle has pulled off a few deals this year. It bought the government operations unit of Booz Allen Hamilton for $2.54 billion last summer and recently sold automotive company AxleTech International to General Dynamics for what Carlyle called "an excellent gain."
Edscha is part of a fund called Carlyle Europe Partners I that to date has returned twice its initial investment, Ullman said.
Overall, Ullman said, "our global portfolio of 200 companies is doing well, and we have $40 billion in capital to invest."
