K&N Reaches Agreement with 100% of Lenders and Equity Sponsor to Recapitalize its Balance Sheet and Position K&N for Future Success
Agreement to Strengthen Financial Position and Reduce Debt by Approximately $250 Million
Continuing to Deliver Industry-Leading Automotive, Industrial, and Residential HVAC Filtration Technology to Customers Worldwide
Announces CEO Transition
RIVERSIDE, Calif., Jan. 3, 2023 /PRNewswire/ -- K&N Engineering, Inc. (“K&N” or the “Company”) today announced that it has taken steps to strengthen its financial foundation and position the business for continued long-term success.
The Company has entered into a Restructuring Support Agreement (“RSA”) with 100% of its lenders to significantly strengthen its financial position. Upon consummation of the transaction, K&N’s debt will be reduced by approximately $250 million and participating lenders will inject $60 million of cash into the business. K&N expects to complete the transaction in the first quarter of 2023.
Once completed, the recapitalization will provide K&N with increased financial flexibility to execute its growth strategies and continue investing in the industry-leading automotive, industrial, and residential HVAC filtration technology that it provides to its customers worldwide. K&N remains committed to its strong vendor relationships and talented team members, which underpin the Company’s success and market leadership position. The Company’s current initiatives and marketing collaborations remain in place.
K&N today also announced that it has appointed Randy Bays as interim Chief Executive Officer, effective January 3, 2023. Mr. Bays succeeds Richard Bisson, who is stepping down as the Company’s CEO to manage his family office.
Mr. Bays has run the Company’s operations since joining K&N in March 2022, and brings decades of experience as a business leader with a track record of revenue growth, innovation and operational excellence. Prior to joining K&N, Mr. Bays served as the CEO of Kinetek, the President of Sensus and also held numerous other senior-operating positions at both GE and Bowmar Aerospace.
Randy Bays, interim CEO said, “Over the course of five decades, K&N has built a reputation for exceptional quality and customer service that millions of customers love and trust. With the overwhelming support of our financial partners and an infusion of new capital, we look forward to continuing to provide outstanding products and services to our customers. We remain committed to serving our customers, supporting our racing partners and enhancing the performance of vehicles across the globe. Upon consummation of the transaction, we believe that K&N will be positioned to capitalize on tremendous growth opportunities both in the automotive aftermarket as well as industrial and residential HVAC markets worldwide.”
Tim Pohl, a member of the Company’s board of directors said, “We are pleased to announce the appointment of Randy Bays as interim CEO of K&N. Since joining the Company, Randy has worked with the K&N team to drive significant improvements in operational performance over the last ten months. Randy is a proven leader with extensive industry knowledge, and we are confident he will continue to execute the Company’s strategy, achieve K&N’s business objectives and lead our talented team.”
Mr. Pohl continued, “On behalf of the Board, I thank Richard for his many contributions to K&N over the past three and a half years. During his time as CEO, Richard upheld K&N’s reputation as an industry leader while navigating a challenging macroeconomic environment. We wish him all the best in his future endeavors.”
Davis Polk & Wardwell LLP is serving as K&N’s legal counsel, Evercore is serving as financial advisor and Alvarez & Marsal is serving as restructuring advisor. Ropes & Gray LLP is serving as legal counsel and Ankura Consulting Group is serving as financial advisor to an ad hoc group of first lien lenders. Crowell & Moring LLP is serving as legal counsel to the revolving first lien lenders. O’Melveny & Myers LLP is serving as legal counsel and Piper Sandler & Co. is serving as financial advisor to an ad hoc group of second lien lenders.
This press release does not constitute an offer to sell or buy, nor the solicitation of an offer to sell or buy, any securities.
Since 1969, K&N® has been an industry-leader in filtration technology—offering products to increase performance, protection, and longevity in thousands of vehicle applications for automotive enthusiasts worldwide. Whether you’re searching for an air filter to help protect your engine and increase performance, a cabin air filter to keep the interior of your vehicle clean and fresh, or a home air filter to help protect the air you breathe at home—K&N® has the reputation for exceptional quality and customer service that you can trust. A long and storied racing heritage continues to contribute to the development of products for all types of vehicles and engines. For more information about K&N®, visit www.knfilters.com.
This press release may contain forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements include, but are not limited to projections, statements regarding the company’s expected future performance, future financial condition, anticipated operating results, strategy plans, future liquidity and financial position. Any forward-looking statement made by the Company in this press release speaks only as of the date on which such statement was made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Statements can generally be identified as forward looking because they include words such as “believes,” “expects,” “intends,” “plans,” “will,” “believes,” “estimates,” “potential,” “predict,” “seek,” and variations thereof or “could,” “should” or words of similar meaning. Statements that describe the Company’s objectives, future plans or goals are also forward-looking statements, which reflect the current views of the Company with respect to future events and are subject to assumptions, risks and uncertainties that could cause actual results to differ materially. The factors that may affect the Company’s results include, among other, the participation by the Company’s creditors in the transactions contemplated by the RSA, the ability to negotiate and execute definitive documentation with respect to the transactions contemplated by the RSA, satisfaction of any conditions in any such documentation, and the availability of alternative transactions.
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SOURCE K&N Engineering