Hart's auto parts business eyes asset sales

Graeme Hart is estimated to be worth $9.1 billion. Photo / Bloomberg

New Zealand billionaire Graeme Hart's UCI Holdings auto parts business is seeking to amend its credit agreements to free up potential asset sales in the latest move by the country's richest man to trim down the size of his investment empire.

UCI wants to change the credit agreement governing its senior secured credit facilities relating to the asset sale covenant that would allow the addition and release of one or more of the company's subsidiaries as borrowers under the agreement, the Lake Forest, Illinois-based company said in a statement this week. UCI said it couldn't guarantee the results of the amendment process.

In relation to the proposal, UCI said it anticipates sales were between US$240 million and US$252 million in the three months ended March and adjusted earnings before interest, tax, depreciation and amortisation of US$7 million to US$11 million in the period.

The flat to small decline in revenue arose from reduced sales in the retail and traditional channels due to a delay in the rollout of a new product and the loss of a customer, while earnings were down because of increased costs and operating inefficiencies stemming from restructuring and new business wins in its filtration product line, UCI said.

As at December 31, UCI had long-term debt of US$685 million, more than half its US$1.13 billion in total liabilities. The company's total assets were valued at US$1.36 billion at the end of 2014.

Media reports last year flagged the possibility of asset sales in Hart's UCI business, with falling prices and skinnier margins leading to a consolidation in a highly fragmented car parts aftermarket.

Hart's Rank Group acquired UCI for US$980 million and FRAM Group for US$950 million in 2011 in leveraged buy-outs, at a time when it was near the end of building a global packaging empire in Reynolds Group Holding.

In the past year Rank has slimmed down its investments, with Reynolds hiving off its Sig Comnibloc unit for 3.6 billion euros and looking at divesting its Evergreen and Closures units, while Carter Holt Harvey sold its pulp, paper and packaging businesses for NZ$1.04 billion with the building products and supplies business tipped for an initial public offering this year.

Hart's wealth is estimated to be about US$7 billion, according to the Forbes rich list.