Creditors are giving Breed Technologies Inc. a three-and-a-half-month reprieve on its debts as the safety systems manufacturer seeks solutions to its financial problems.
One possible remedy could be selling part of the business.
At the beginning of the month, the Florida, USA-based supplier was given until 12 October to make payments on $675 million debts that were due 30 June. Breed has racked up total debts of about $900 million during an aggressive acquisition strategy in recent years.
Among the conditions of the reprieve stipulated by creditors are that Breed must pay a higher interest rate on the debt after August, and it must also 'explore strategic alternatives for the business.' Analysts say the latter condition translates to selling part of the company.
Breed has retained an investment banking firm, Wasserstein Perella & Co. of New York, to advise it on a 'capital transaction program.' But a Breed spokeswoman would not confirm that a sale is definite. 'We are exploring many ideas and haven't fully clarified our options,' said spokeswoman Gina McLean.
Analysts have reported that Breed has talked to Siemens AG about a possible acquisition. In 1997, Siemens formed a joint venture with Breed to design 'smart' airbags. As part of the deal, the German supplier bought a 10 percent share of Breed. The two companies broke off acquisition talks last month, according to Standard & Poor's Corp.
Breed has many worldwide operations it could sell. 'But if they had their choice, I'm sure they wouldn't want to sell anything,' said David Strickler, an analyst with Bowles Hollowell Conner & Co., a Charlotte, North Carolina, investment firm that follows Breed.
Just two years ago, Breed paid $711 million to buy the seat-belt business of AlliedSignal Inc. Strickler said reselling that operation could easily wipe away Breed's problems. But such a sell-off might undermine Breed's strategy of supplying total safety-restraint systems, the analyst acknowledged.
Breed has tried to piece together a global systems approach to its airbag business. It has acquired steering-wheel producers, seat-belt makers, sensor manufacturers and other suppliers in North America and Europe to turn itself into an integrated supplier.
But as operating losses mounted, Breed began taking steps to get rid of excess overhead. In the past two years it has closed half its worldwide plants. It has also tried to get out of the plastic trim business.
Spokeswoman McLean said Breed has been in 'continuous communications' with customers as it works through its debt problems.
