Wheel maker Accuride files for bankruptcy for U.S. operations

The private-equity owners of Accuride Corp.’s U.S. operations have filed for protection from the wheel and wheel-end maker’s creditors and are looking to sell their businesses’ assets.

In filings with the U.S. Bankruptcy Court for the District of Delaware, Michigan-based Accuride disclosed that it has total debts between $500 million and $1 billion—more than $73 million of which is maturing this month—and is down to about $6 million in available cash.

Chief Restructuring Officer Charles Moore wrote that “supply chain distortions and a steep rise in the cost of several key inputs” have stretched Accuride’s finances even as it grew in recent years and that efforts this summer to drum up buyers for the business’ various divisions did not bear fruit before filing Chapter 11 papers became necessary.

Accuride is a global manufacturer home to 3,600 people in eight countries, but this Chapter 11 filing covers only its U.S. operations. It has been owned by Crestview Partners since late 2016 and has secured $30 million of debtor-in-possession financing from its primary lenders to keep Accuride’s businesses running through the reorganization. The leadership team’s preliminary goal is to complete its restructuring by late January.

“Accuride anticipates a quick emergence from Chapter 11, with a de-levered balance sheet and improved capital structure,” President and CEO Robin Kendrick said in a statement. “I am confident this reorganization will give Accuride the financial flexibility it needs to grow its business and support its employees, customers, and suppliers.”

An Accuride snapshot

Founded in 1986 via a carve-out acquisition from Firestone Tire & Rubber Co.
Brands include Accuride, Gunite and KIC.
Its Wheels North America division sells steel and aluminum wheels to more than 1,000 commercial vehicle manufacturers and aftermarket distributors.
It runs plants in Erie, Pennsylvania; Henderson, Kentucky; and Springfield, Ohio
Executives claim they have 56% of the steel wheels market for original manufacturers of medium- to heavy-duty trucks as well as 51% for trailers and 33% of the aftermarket.
For aluminum wheels, the company claims a 28% market share for medium- to heavy-duty truck OEMs as well as 29% of the aluminum wheels market for trailer makers and 30% of the aluminum wheel aftermarket.
The company's wheel ends parts division runs a plant in Rockford, Illinois, that has an in-house foundry and the capacity to make 2.2 million brake drums and 845,000 slack adjusters annually.

Court filings show that Accuride’s slide toward a Chapter 11 filing—which comes 15 years and one day after the company filed for bankruptcy in the wake of the Great Recession—was the result of a number of factors.

Prominent among them was a spike in costs during the COVID-19 pandemic and resulting supply-chain snarls. But executives also took longer than expected to integrate the mid-2018 acquisition of German firm Mefro and said they couldn’t nurse an Ontario wheel-end plant to profitability. Both of those efforts took extra time and money.

On top of those events, the current freight recession has cut into demand from truck OEMs. That, Moore wrote, led Accuride’s leaders to stretch suppliers’ payment terms or move around orders. That prompted some vendors to tighten their terms or worse: Baltimore-based Hydro Aluminum Metals USA LLC took Accuride to court in May over $4 million worth of aluminum orders and was granted summary judgment for that amount just before Labor Day.

By late spring, Accuride’s leaders were shifting their restructuring efforts into a higher gear. They began making bridge loans that have totaled $65 million since June—nearly $18 million of which has gone to keeping Accuride in good standing on its asset-backed loans—and hired investment bankers to shop parts of the company. But those efforts—31 entities signed non-disclosure agreements, seven of which later signaled interest in a deal—has not provided an offer Crestview could accept.

“While these efforts have not yet borne fruit in the form of an actionable bid, they have served as a basis for the debtors and their lender to coalesce around a path forward,” Moore wrote in his initial declaration to the bankruptcy court.

Separately, Accuride’s leaders are looking for bidders for the Canadian arm of the business. Even though that operation isn’t part of the Chapter 11 process, it continues to need new capital from the broader organization, and executives plan to ask for protection from its creditors.

In addition to Hydro, the company’s largest unsecured creditors that are not insiders (plus the amount they are owed but, per Accuride’s bankruptcy petition, won’t receive) are: