Two ferrous foundry groups, Citation Corp. and Grede LLC, have completed a merger of their holdings, leading to the establishment of a new company, Grede Holdings LLC. The new organization will be headed by Citation Corp. president chief executive Doug Grimm and headquartered in Novi, MI.
According to Grimm: “The combination of Citation and Grede creates what we believe is the most diversified foundry company in North America with one of the strongest balance sheets in the industry.”
Grimm said the objective is to “to harness the best of both companies’ people, assets, and technologies to provide an unparalleled array of products and capabilities to the iron castings market.”
Included in Grede Holdings LLC are the six Grede foundries that Wayzata Investment Partners LLC acquired last year (Wauwatosa and Reedsburg, WI; St. Cloud, MN; Wichita, KS; New Castle, IN; and Iron Mountain/Kingsford, MI), plus the Grede headquarters in Milwaukee; and, eight foundries (Berlin and Browntown, WI; Brewton, Bessemer, Marion, Columbiana, and Selma, AL; Biscoe, NC), and two machining plants (Menomonee Falls and Oconomowoc, WI) from the former Citation organization.
As an organization, Grede Holdings will have capacity for nearly 600,000 tons/year of finished castings. Much of its customer base will be in transportation markets — including automotive, diesel, and medium- and light-duty trucks — but the group will have an expanded presence in broader industrial markets, including off-highway, rail, and energy. Its capabilities will ductile, gray, and high-silicon molybdenum iron, producing castings by various processes, as products ranging from 1 to 2,000 lb. Machining and assembly also will be featured.
The merger was detailed as “a series of transactions resulting in the combination of certain assets,” lending credibility to industry speculation over recent months that an ambitious consolidation of metalcasting assets would be implemented by Wayzata Investment Partners. Wayzata is the private-equity group that financed Grede Foundries through its 2009 bankruptcy reorganization, and then acquired most of Grede’s assets at the bankruptcy auction.
In the announcement of the merger, Grede Holdings said the consolidation effort began with Wayzata’s December 2009 purchase (via Grede LLC) of the Grede Foundries assets. Further transactions included new equity investment from Wayzata and from Citation’s largest shareholder, GSC Group. The value of that investment and the capitalization of the new company were not reported.
Wayzata Investment Partners will hold the controlling interest in Grede Holdings LLC.
Grimm predicted the group would achieve $600 million in revenue in 2010. He said “significant equity investment” has reduced the two preceding organizations’ total funded debt by 80%, or $110 million. “This gives us a best-in-class financial profile, allows us to invest appropriately, and weather economic cyclicality moving forward,” he said.