By Robert Sherefkin and David Barkholz
Financier Wilbur Ross, who is bidding to purchase interiors supplier Collins & Aikman Corp., now says the troubled company no longer is the linchpin of his plan to create a North American megasupplier.
Another bidder, a New York mutual fund called Third Avenue Management LLC, is vying to purchase Collins & Aikman.
Ross says he is now looking at Lear Corp.'s unprofitable interior trim business and other troubled suppliers.
The genial New York investor wants to create three megasuppliers of plastics, metal parts and safety products by purchasing distressed suppliers.
In an interview last week after an investor conference in Dearborn, Michigan, Ross revealed that he was considering bids to purchase "half a dozen companies in Chapter 11 bankruptcy, a couple of other suppliers and a couple of healthy Asian companies".
He did not identify the companies and would not provide a timetable.
But time favours the patient buyer, and Ross says he is a patient man.
Collins & Aikman is preparing to emerge from Chapter 11 reorganisation in coming months.
By shedding its fabrics operation and closing plants, the company has slimmed from $4000 million in annual sales to $2500 million.
But Ross faces a rival bidder.
Last year, Third Avenue Management purchased Collins & Aikman bonds worth $250 million after the supplier entered Chapter 11.
That seems likely to drive up the price of Collins & Aikman's assets.
Now Ross is looking elsewhere.
Lear has signaled its intention to divest its North American interior trim business.
Last year that operation lost $191 million on sales of more than $3100 million.
Ross says he might be interested in buying Lear's assets even if the Collins & Aikman deal doesn't materialise.
Another possibility is Delphi Corp., which wants to sell its cockpit and interior trim business as it reorganises its US operations under Chapter 11.
Ross would not indicate whether he will bid on Delphi's assets.
While he waits for a North American shakeout, Ross is focused on European buyouts.
Last month his International Automotive Components Group LLC agreed to buy Lear's European interior systems business.
He says anti-trust regulators have cleared the deal, and he expects to wrap it up next month.
Ross has also purchased Collins & Aikman's European assets.
His newly-formed European supplier is expected generate annual revenue of about $1200 million.
Since 2002, the tally of defaults among US suppliers includes such big names as Delphi, Dana Corp., Tower Automotive Inc. and Collins & Aikman.
The list is likely to grow this year.
Ross, who has been dubbed the "king of bankruptcy", says he expects a fresh wave of failures among suppliers early next year.
That will drive prices down, and Ross likes to buy his assets for pennies on the dollar.
Billions of investment dollars are waiting for the industry to hit bottom and Ross says that may be months away.
"During the [Detroit] auto show, I said 2006 would be the year of the perfect storm," he said.
Now he says he was wrong.
"I am surprised that in the supplier community that there is not a greater sense of urgency," he said.
"If you compound the industry's other problems with the number of new launches for 2007, there is a potential for [companies] to really spiral out of control."
From Automotive News (A Crain publication)