"Today's announcement marks an important step forward for Hoonigan that will enable us to advance our industry leading position in the growing automotive aftermarket sector," CEO Vance Johnston said.
"With a significantly strengthened balance sheet and new capital, this transaction will position us to invest in innovation and further drive financial performance. With the strong support of our financial partners, we remain laser-focused on providing cutting-edge products and best-in-class service to our partners throughout this process."
Hoonigan filed voluntary petitions for Chapter 11 relief in the U.S. Bankruptcy Court for the District of Delaware. Hoonigan said it expects to emerge, within two months, under the majority ownership of a group of its current lenders, "who recognize the potential of the automotive aftermarket industry and are confident in Hoonigan's ability to continue to operate at its forefront," the company said.
The RSA "provides for a consensual, prepackaged restructuring proceeding" which includes a motion to approve a $110 million term loan debtor-in-posession (DIP) facility and a $175 million ABL DIP facility. Hoonigan said this will allow the company to continue operating as normal during restructuring without impacting "trade creditors, customers, employees,vendors, or suppliers" and allow it to "honor its commitments to strategic partners."
In its filing, the company said: After experiencing growth through the COVID-19 pandemic and significantly expanding its product offerings and sales channels through acquisitions and the establishment of certain new business units, it began to experience a downturn in demand in late 2021.
At the same time, it said its cost structure was stressed by supply-chain distortions and tariffs being placed on certain of the company's products. Further, a series of acquisitions strained its ability to manage operations and operting costs effectively, resulting in liquidity depleting at a higher-than-expected rate.
To navigate these challenges, the company engaged in a series of efforts to bolster its liquidity and position itself for improved sales volumes when the post-COVID-19 demand slump and other challenges subsided.
The company reported record revenue of $1.5 billion in fiscal 2022, but then saw revenues fall off to approximately $1.34 billion in 2023. The company's adjusted EBITDA dropped by $152 million in 2022 from 2021 and dropped an additional $23 million last year.
Hoonigan's operations outside of North America are not part of the bankruptcy process.
The company serves over 30,000 retailers, warehouse distributors and specialty builders through a global network of 42 distribution centers (including 37 in the U.S.). It derives 61% of its annual sales revenue from the sale of wheels, tires and accessories.
Among the firm's wheel brands are American Force, Fuel, Black Rhino, KMC, American Racing, Rotiform, Moto Metal and U.S. Mags; the company claims a 40$ to 45% share of the U.S. wheel aftermarket.
It also distributes tire brands such as Falken, Fuel Off-Road and Nitto.
