Marelli Pushes Back Decision on Sponsor After Talks Stall

(Bloomberg) -- Marelli Holdings Co., the auto-parts supplier seeking to renegotiate its debt, wasn’t able to decide on a sponsor or business restructuring plans for for its turnaround in its meeting with creditors this week, the company said. 

The company, a key supplier for automakers Nissan Motor Co. and Stellantis NV, is now seeking to select a sponsor and finalize a plan next month, spokesman Hiroshi Watanabe told reporters after a meeting with creditors on Tuesday.

KKR & Co., Marelli’s current shareholder, has tied up with India’s Motherson Sumi Systems Ltd. on a proposal, while Bain Capital and Apollo Global Management have joined forces on a bid, people with knowledge of the matter have said. There are various sponsorship proposals, but more time is needed for evaluation and assessment of assets, Watanabe said.

Marelli, which saw business conditions deteriorate due to the pandemic and supply chain disruptions, filed last month for an ADR procedure in Japan, which lets a company under financial strain renegotiate its debt with creditors while continuing to operate. The parts supplier was created in 2019 when KKR merged its Calsonic Kansei and Magneti Marelli units. 

The proposal by the KKR-Motherson consortium didn’t meet conditions needed for Marelli’s restructuring, the people had said last week. It’s estimated that the winning sponsor will have to put up 100 billion yen ($816 million) in additional capitalization for Marelli, people with knowledge of the finances have said.

Marelli’s goal is to renegotiate its debts with Mizuho Financial Group Inc. and other lenders in order to return to a more sound financial footing. The supplier had at least 1.1 trillion yen in total debt as of September, according to people with knowledge of the finances. 

During the turnaround ADR process, negotiations between a company and its creditors are facilitated by an independent group of mediators with legal and accounting expertise, who are chosen by the Japanese Association of Turnaround Professionals and appointed by the economy ministry.

Marelli’s revenue plummeted last year as the coronavirus pandemic took hold, disrupting supply chains, chip supplies and automobile manufacturing across the globe. The company employs about 54,000 people and operates about 170 facilities around the world to manufacture lighting systems, air conditioning, electric motors, suspensions and other components for carmakers across the globe. 

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