Wed 12/22/2021 15:12 PM
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Wanxiang Group Corp. is no longer seeking to acquire Apex Tool Group from Bain Capital, according to sources. Hangzhou, China-based Wanxiang Group, a maker of auto parts, had been in talks with Bain Capital to buy the Maryland-based company in a deal that could value Apex at about $2 billion to $2.5 billion, according to press reports.

In the third quarter, Apex Tool Group’s adjusted EBITDA fell 28% year over year, and free cash flow was $40.3 million, according to an earnings report in November. Results were weaker than expected as a result of supply constraints, inflation and the reversal of Covid-related cost cuts made during 2020, sources said.

In the same month, Moody’s downgraded Apex's CFR to Caa2 from Caa1 and changed the outlook to negative from stable, citing the company’s “untenable capital structure.”

Apex’s inability to generate a material amount of earnings hampers recovery in key debt metrics, the ratings agency said in the report, adding that the owner Bain was unlikely to infuse much-needed cash so that debtholders could be made whole and Apex's looming maturity profile could be solved.

The company’s term loan due August 2024 was quoted today at 98.04/98.65, according to Solve Advisors, down from roughly 100/100.3 one month earlier.

Apex’s $325 million 9% unsecured notes due 2023 last traded in size on Dec. 20 at 95, yielding 13.83%, according to TRACE.

Apex Tool Group sponsor Bain Capital declined to comment. Wanxiang Group did not respond to a request for comment.

--Patrick Fitzgerald, Gaurav Sharma, Adelene Lee
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