Grede files bankruptcy

By Ken Leiviska
Times-Press

REEDSBURG — Grede Foundries, Inc. filed for Chapter 11 Bankruptcy Tuesday.

Grede has been slashing jobs in plants across the country and even shut its South Carolina plant down in response to lower volumes of automotive parts being ordered by car manufacturers.

According to a message by Grede Board Chairman Richard T. Koenings on Grede's website, the decision was made due to significant challenges in the manufacturing industry.

"For Grede, the effects of high material costs, a dramatic reduction in production orders across most of our markets and the bankruptcy filings of General Motors and Chrysler have cut deep," the statement reads. "Because of these difficult economic circumstances, Grede's leadership has taken several strategic steps to position the company for an effective turnaround as the U.S. emerges from the most difficult economic period it has seen in generations."

This is a difficult, yet strategic move to better position Grede in the future, Koenings' statement continues. "We have carefully explored many options, and believe a sale to a strong financial backer like Wayzata is the best way to effectively proceed in what has been an exceedingly difficult marketplace," he said in a separate press release.

Evan Zeppos of Zeppos and Associates, Inc., a public relations firm that works with Grede in national matters, agreed.

"As a difficult step as it is, it is the best step we can take," Zeppos said. Petitioning for reorganization will allow buyers to supply a loan facility or buy the company.

Wayzata Investment Partners LLC of Wayzata, Minn. has emerged as the first bidder, often called a "stalking horse" buyer, and has offered Grede a $45 million temporary line of credit, until an orderly sale under the supervision of the bankruptcy court takes place.

Wayzata, an SEC-registered investment adviser and manager of private investment funds with over $5 billion in assets, has invested more than $12 billion in over 600 investments since 1992.

"That will help the company get out of bankruptcy and put them in a position of strength in the future," Zeppos said.

"Wayzata's commitment to put up $45 million is the strongest claim you can ask for."

Zeppos said Wayzata and Grede have been talking for several weeks about the possibility of providing a loan facility. If Wayzata is approved by the bankruptcy court as a viable offer to creditors, which Zeppos stressed is not a sure thing, he said the Minnesota company stands to hold very strong ownership of Grede.

In his statement, Koenings said the offer Wayzata has made, "shows their belief in the strength of the Grede name and its respected position in the foundry industry."

If the bid made by Wayzata, or another company, is approved by the court, they will own the assets they bid on. The current owners of Grede would then retain ownership of whatever assets remain. Zeppos said it is entirely possible one company will bid on the entirety of Grede's assets, leaving current Grede owners with nothing.

Zeppos would not speculate when a court decision regarding the loan and possible sale would be made, adding that it will be this influence that decides the ultimate fate of Grede Foundries.

Reedsburg Effect

The Reedsburg plant has released nearly 300 workers in the last year, including 140 in January, when they cut operations to one shift. The plant and its current employees appear to be safe for the time being.

Dale Herritz, interim manager at Grede's Reedsburg plant, was on vacation this week and could not be reached. Konya Harrison, who works in the human resources department, said she was not at liberty to comment on the situation.

Koenings and Zeppos have assured that all Grede plants will remain open and no jobs will be lost in this transitional phase.

"Operations at all our plants, including Reedsburg, will be business as usual and there will be no job loss," Zeppos said.

In his online statement, Koenings said normal operations are expected at Grede plants, while allowing the company to choose a profitable path for the future.

"This move gives us the time to restructure while we continue to do business and operate our plants. Grede will continue to buy goods and services from its vendors, support its workforce and provide its customers with the same quality products and service they've come to expect from us. Our goal is to preserve and strengthen our business so that we can compete successfully in the future," the statement reads.

Once Grede is sold, however, Zeppos could not predict the future of its plants or its employees. "While we're going through this process, it is business as usual," he said. "Where we go beyond the bankruptcy is based on the decision of the court."