News & Analysis

Pamplona rescues German car part maker

Leverkusen-based TMD Friction, which for six years was owned by UK buyout firm Montagu Private Equity, has now been bought out of bankruptcy by UK-based asset management firm Pamplona, saving 3,800 jobs.

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UK-based alternatives firm Pamplona Capital Management has bought TMD friction, a German manufacturer of parts for the auto industry, out of bankruptcy in an all-equity deal. Financial details were not disclosed.

The company needs financial flexibility right now.

Martin Schwab

Leverkusen-based TMD was originally bought out by UK-based Montagu Private Equity for €776 million in 2000. It proved a problem investment for the former captive arm of HSBC and in 2006 it was seized by a group of hedge funds in a loan-to-own transaction.

Auto parts: credit crunch put the brakes on demand

TMD, which makes brake pads for various types of vehicle, has been hit by the downturn in the motor trade. The business declared bankruptcy in December last year but has continued trading. The takeover of the company safeguards approximately 3,800 jobs.

Martin Schwab, partner at Pamplona, said TMD’s bankruptcy was caused by an inappropriate capital structure and the market downturn.

Pamplona’s acquisition of TMD was an all-equity deal and Schwab said the main drivers for this were speed and the need to fix the firm’s balance sheet. “The company needs financial flexibility right now,” he said.

Pamplona has invested in two previous German deals: jewellery supplier Amore and industrial parts company SAF Holland.