While financing remains relatively cheap for companies with strong credit ratings, buyout deals typically need leveraged loans and high-yield bonds—the riskier form of lending that carries some of the highest interest rates and often is the first financing to be withdrawn when credit tightens.
Wall Street banks are becoming more selective about what financing deals they commit to or stiffening lending terms, making buyout deals like Cooper Standard more costly for buyers and therefore limiting their ability to pay. The company emerged from bankruptcy in May of 2010 under the control of a handful of hedge funds, including Silver Point Capital and Oak Hill Advisors. The Novi, Mich.-based company, which makes body sealing systems and fluid handling systems for the automotive industry, could be valued at more than $1.5 billion, several people told Reuters previously.
Meanwhile, Carlyle is also bidding for another auto parts supplier TI Automotive, which competes with Cooper Standard in the fluid system segment and has been considering a sale since early this year, people familiar with the matter said.
TI Automotive and Cooper Standard are the world’s two largest suppliers of systems that control, sense and deliver fluids and vapors in vehicles. But TI has greater exposure to the fast-growing Asian markets, drawing roughly a quarter of its revenue from China and other Asian markets.
Representatives for Carlyle, Cerberus and Platinum Equity all declined to comment. Cooper was not immediately available for comment.
(Soyoung Kim is a correspondent for Reuters in New York.)