Prairie Village-based WireCo WorldGroup said a Toronto-based investment firm is buying a majority stake and helping reduce its debts.
Onex Corp. called the deal a “recapitalization transaction” in its announcement Monday but offered few details of the agreement. The purchase is coming through Onex Partners IV, a $5.7 billion private equity fund that will invest $260 million.
WireCo WorldGroup said it expected, after the transaction, to extend its debt maturities to later repayment dates. Its announcement also said the company would be able to reduce its debt by about $240 million to $600 million and reduce its annual interest expense by $20 million.
“With the additional flexibility we are gaining from our refinancing, we will have the ability to invest across WireCo’s portfolio of leading brands,” José Gramaxo, WireCo’s chief commercial officer, said in the announcement.
WireCo WorldGroup employs 4,000 globally at its headquarters, manufacturing plants, distribution centers and research and development centers. It makes steel wire rope, synthetic rope, specialty wire and other engineered products.
The company has been losing money in recent years and posted a 20 percent drop in revenues to $684 million last year, which pushed its losses up by 25 percent to $38.6 million. It cited a drop in sales to the oil and gas industry, the mining industry and the industrial and infrastructure end markets.
Losses continued into the first three months of this year when WireCo WorldGroup said it lost $19.9 million on $149 million in revenues.
A year ago, the company received $8 million in incentives to move its headquarters and about 185 employees to Prairie Village from the Ambassador Building at Kansas City International Airport. In March, it announced plans to shutter its St. Joseph wire rope factory, idling 49 workers.
The selling group is made up of investment funds managed by Paine & Partners, which will retain a “significant minority stake” in WireCo WorldGroup, the company’s announcement said. Paine & Partners purchased the company in 2007.
The sale requires regulatory approval and is expected to be completed later this year.