Questor Likes Auto Industry Plays –

Questor Management Co. is looking to give Zenith Industrial Corp. and Aetna Industries Inc. a much-needed jump. Although completion of the deal is still pending, Southfield, Mich.-based Questor has signed an agreement to buy the two bankrupt automotive-related companies, both offspring of Trinon. The terms of the transaction have not been disclosed.

Headquartered in Centerline, Mich., Aetna manufactures large stampings and modular assemblies for the automotive industry. Zenith, located in Roseville, Mich., manufactures smaller stampings and sub-assemblies. Both companies sell their products directly to automotive companies in North America. In 2001, the combined companies had sales in excess of $325 million. They both filed for Chapter 11 under the U.S. Bankruptcy Code.

“The companies’ profitability has been depressed by the reduced volumes in the North American automotive market, and they have been operationally constrained because of an excessive debt load,” said Wallace Rueckel, a Questor principal. “However, they will be relieved of excessive debt when Questor’s purchase is complete and then they will be well positioned to compete.”

The Chapter 11 reorganization filing could potentially scuttle the deal, either through a court-appointed auction or the emergence of a third party that makes a serious counter-offer.

Should Aetna or Zenith pull out of its agreement, Questor would be entitled to a break-up fee to compensate for the time and money it has put in so far, Rueckel said.

The merger, if completed, is intended to eliminate duplication and enable Questor to cross sell.

Questor typically holds onto a company for three to five years, “but we can and will hold it longer or shorter depending on what needs to be done,” said Rueckel, who envisions the new unnamed company to be profitable within two years.

Questor will make the investment out of Questor Partners Fund II, which raised $860 million in 1999. The firm raised its first fund, $300 million, in 1995. To date, the firm has committed more than $1.1 billion into underperforming companies.