Cerberus in $257m auto fabrics exit

Cerberus Capital Management has exited portfolio company Guilford Mills, selling the automotive fabrics company to the Lear Corporation for $257 million, the firm announced in a statement. 

The transaction closed on 31 May. The firm declined to comment beyond the release.  

Cerberus acquired the company for $107 million in 2004. At the time, Guilford Mills was only a year and a half out of bankruptcy, having filed for Chapter 11 in March 2002. The company emerged from bankruptcy in October 2002, and was eventually bought by Cerberus less than two years later.

Under Cerberus’s ownership, manufacturing and sales were streamlined across product lines, which helped the company weather the credit crisis that deeply affected the rest of the auto industry, according to a market source. The firm’s annual sales are typically around $400 million. 

Headquartered in North Carolina, Guilford specialises in providing fabric automotive interiors, as well as specialty products for water filtration, window covering, performance apparel, medical and other industrial applications. The company has sales offices throughout the US, Europe and Asia and operates manufacturing facilities in North Carolina, the UK and France. 

In April, Cerberus held a first close on its fifth flagship fund at $1.1 billion. The firm is targeting $3.75 billion with a $4 billion hard-cap. 

The firm’s previous fund suffered after its investment in US automaker Chrysler failed to save the company from bankruptcy and GMAC Financial, another portfolio company, had to be bailed out. In December 2009, Cerberus Institutional Partners IV was generating a negative 10.13 percent IRR, according to the Public Employee Retirement System of Idaho.

Cerberus eventually broke even on its Chrysler investment, sources said, and the fourth fund has since recovered, generating a 6.29 percent IRR as of 30 September, according to California State Teachers’ Retirement System documents. 

The firm was founded in 1992. Cerberus is headquartered in New York City and has more than $20 billion under management.