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ROLE OF PRIVATE EQUITY IN AUTO SUPPLY BASE RESTRUCTURING

ROLE OF PRIVATE EQUITY IN AUTO SUPPLY BASE RESTRUCTURING. Thomas T. Stallkamp Industrial Partner Ripplewood Holdings, LLC Automotive News World Congress January 17, 2006. Factors Affecting Supplier Restructuring. Limited traditional financing Frequent reliance on single customer

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ROLE OF PRIVATE EQUITY IN AUTO SUPPLY BASE RESTRUCTURING

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  1. ROLE OF PRIVATE EQUITY IN AUTO SUPPLY BASE RESTRUCTURING Thomas T. Stallkamp Industrial Partner Ripplewood Holdings, LLC Automotive News World Congress January 17, 2006

  2. Factors Affecting Supplier Restructuring • Limited traditional financing • Frequent reliance on single customer • Lack of OEM assistance or loyalty • Liquidity issues created by uncertain schedules • Arbitrary OEM pricing requests

  3. “Restructured” Supplier Profile (You’ll know things are better when…) • Pricing based on technology/cost advantage • Balanced customer base • Operations in major geographic markets (NA, Europe, Far East) • Streamlined overhead and wage structure • Cost reductions greater than price downs

  4. Role of Private Equity • Accelerate restructuring of supply base • Increased size and mass through add-on acquisitions or mergers • Provide capital for refinancing • Promote critical review of Business Plan • Increased emphasis on profitability over revenue • Increased management involvement through ownership

  5. Opportunities in Auto Supply • “Industry will always need parts” • Take advantage of restructuring events • Combination of similar operations/suppliers • Acquisition of OEM non-core businesses • Coordinating with OEM outsourcing plans as preferred supplier • Leverage of global assets (accelerate moves to lower cost locations)

  6. Light Metal Strategy Public – Japan Private – Belgium Locations – Japan Europe Thailand Brazil China – JV Canada • Multiple customers • Broad geographic base • Strong technology and developments

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