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Supplier Marelli selects KKR to lead turnaround, debt restructuring

Marelli Holdings Co., the auto supplier seeking to renegotiate its debt, selected current owner KKR & Co. as its sponsor in order to restructure the business.

Hiroshi Watanabe, a spokesman for Saitama, Japan-based Marelli, confirmed the decision following a meeting with creditors on Tuesday. The company later issued a statement saying that a selection committee “concluded that the bid received from KKR is best suited to help Marelli restructure its financial position and revitalize its business.”

As part of the turnaround plan, Marelli is seeking the cancellation of about 450 billion yen ($3.5 billion) in debt, out of obligations of about 1.13 trillion yen, according to people with knowledge of the matter. Some of the debt will be converted into equity, said the people, who asked not to be identified because the negotiations aren’t public.  

A key supplier for automakers Nissan Motor Co. and Stellantis, Marelli filed in March for an alternative dispute resolution, or ADR, procedure in Japan, which lets a company under financial strain continue to operate while renegotiating its debt with creditors. Marelli was created in 2019 when KKR merged its Calsonic Kansei and Magneti Marelli units.

“We are pleased that the ADR mediator and Marelli have chosen KKR to continue our support of Marelli,” KKR said in a statement, adding that it “will continue to support Marelli as it works to position itself as an automotive leader for the future, notwithstanding the current challenges the industry is facing globally.”

KKR will write off 200 billion yen of its stake and put up $650 million in new capital to acquire new shares via a third-party allocation, the people said. The investor edged out Bain Capital and Apollo Global Management, which had joined forces to submit a counter-bid, people with knowledge of the matter have said.

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