KANSAS CITY, Mo. (Aug. 24, 2006) — Custom wheel maker American Racing Equipment Inc. (ARE) has bid $17 million to buy most of the assets of fellow wheel maker Weld Wheel Industries Inc., which filed Aug. 17 for Chapter 11 bankruptcy protection.
ARE, an affiliate of Platinum Equity Advisors L.L.C., put in its bid on Aug. 17 to purchase certain assets. Foremost among Weld Racing's assets is its headquarters and manufacturing plant in Kansas City, warehouses in California and Georgia and selected intellectual property, according to court documents.
ARE declined to comment further on the matter.
Weld Racing, founded in 1973 by former sprint car driver Greg Weld, calls itself “a world leader in forged wheel technology,” selling wheels under the Weld Racing, Evo, Rubicon, Sovereign and AFX brands.
Since Weld Racing is in Chapter 11, the bankruptcy court must put the assets up for auction, a date for which is not yet set.
ARE has deposited $2.5 million in “earnest monies,” and the sellers have granted ARE a break-up fee of $400,000 in case there's a higher competing bid offered, the court documents said.
In a letter to customers, Weld cited three reasons for its Chapter 11 filing:
An “ill-advised” move into importing cast aluminum wheels from China;
A 40-percent rise in raw aluminum costs; and
A slowdown in sales of wheels for trucks and sport-utility vehicles, driven by the recent high gasoline prices.
Weld Wheel has secured post-bankruptcy financing from PNC Bank and expects operations will continue uninterrupted, the company said in its letter to customers.