ANDERSON, IN -- Remy International has signed an agreement to sell its light and medium truck diesel engine and component remanufacturing business conducted by Franklin Power Products, Inc. and International Fuel Systems to Caterpillar Inc. The purchase price of $150 million is subject to adjustment for net investment in the business, including working capital, at closing. The transaction is subject to customary closing conditions, and is expected to close before the end of the first quarter of 2007.

"The sale to Caterpillar represents a strategic opportunity to realize value for our stakeholders," said John Weber, president and chief executive officer of Remy International. "This business has performed very well, which is a testament to the total commitment of the employees to quality and lean manufacturing. I want to thank these employees for their dedication and efforts."

"This acquisition represents an excellent strategic fit between Cat Reman and these two companies. It increases our overall product and service offering, and will provide a platform for future growth opportunities for Cat Reman," said Steve Fisher, Caterpillar vice president with responsibility for remanufacturing.

The first $50 million of proceeds from the transaction will be held in a restricted account, pledged as collateral to the company's senior lenders and available for withdrawal only with consent of the lenders under the company's senior credit facility. Next, the proceeds will be used to pay down outstanding revolver borrowings at the time of the closing under the company's senior secured revolving credit and term loan facility and the revolving lender commitments under the facility, currently $160 million, will be reduced by $40 million. Any remaining proceeds also will be held in the restricted account, and generally will be available for use by the company for capital expenditures, to repay revolver borrowings (with a corresponding reduction in the revolver commitment) and general corporate purposes.

The divestiture was managed for Remy by Brookwood Associates, L.L.C. under the direction of Thomas Temple. Weber commented, "I am very pleased with the high degree of competent and professional transaction management provided by both Tom and his team at Brookwood. They were a great resource to Remy over the past several months."

For more information about Remy International, go to: http://www.remyinc.com.