Briggs & Stratton is considering going into bankruptcy to reorganize the company as it faces looming financial deadlines.
On June 15, the company chose not to make a scheduled credit interest payment of $6.7 million, which triggered a 30-day grace period to make the payment. In a filing Wednesday with the U.S. Securities and Exchange Commission, the company said it is “continuing to engage in negotiations and discussions with respect to the Company’s indebtedness.”
According to a report in the Milwaukee Journal Sentinel, the group of banks holding the company’s debt, including JPMorgan Chase, have given the company until Sunday to make the $6.7 million payment.
In its SEC filing, Briggs stated that, “Although the Company is actively pursuing opportunities to improve its capital structure, some or all of the foregoing potential transactions or other alternatives may not be pursued by the Company, may not be available to it or may not be announced in the foreseeable future or at all. If the Company is unable to complete such a transaction or other alternative, on favorable terms or at all, due to market conditions or otherwise, its financial condition would be materially and adversely affected, and the Company would likely need to seek relief in bankruptcy proceedings.”
A report in the Milwaukee BizTimes business publication said that Reorg Research, a financial reporting and consulting firm, reported “Briggs & Stratton has lined up KPS Capital Partners as stalking horse bidder to purchase all of its assets for $550 million in expected chapter 11 filing, per people familiar with the matter.”
Chapter 11 bankruptcy allows companies to operate and work out plans and schedules for repayment of its creditors.
Earlier this year, Briggs & Stratton announced its “strategic repositioning,” through which the company would create a simpler organization through divestitures of the majority of the businesses within the company’s Products Segment.
The company said priority was being placed on divesting the turf products business headquartered in the U.S., and the pressure washer and portable generator product lines. The turf products business headquartered in the U.S. includes lawn and garden and turf care equipment sold under the Ferris, Billy Goat, Simplicity, Snapper and Snapper Pro brands.
Briggs said the repositioning would enable it to focus its businesses with expected annual sales of approximately $1.0 billion in the design, production and sale of residential and commercial engines, Vanguard commercial battery systems and standby power generation systems.
To date, the company has announced no sales of the assets it is seeking to divest. In its last two fiscal years, the company lost $54.1 million (2019) and $11.3 million (2018). In its most recent third quarter that ended March 29, Briggs & Stratton reported an 18% drop in sales from the previous year and a net loss of $145 million, or $3.47 a share, for the quarter compared with net income of $8 million, or 19 cents a share, for the same period in its 2019 fiscal year. The net loss included roughly $134 million in non-cash charges.
The Wednesday SEC filing also revealed the board of directors “approved changes to the titles of certain of its executive officers to more closely align with their respective roles and responsibilities in connection with the Company’s previously-announced strategic repositioning.”
David J. Rodgers, who had been senior vice president and president of the Engine Business, is now senior vice president Corporate Development and president – Job Site. William H. Reitman, who had been senior VP and president Global Support, has been named Senior Vice President Sales – Americas Turf & Consumer Products.