K&N Engineering Inc. has announced that it has taken steps to strengthen its financial foundation and position the business for continued long-term success.
The company has entered into a Restructuring Support Agreement (RSA) with 100% of its lenders to significantly strengthen its financial position. Upon consummation of the transaction, K&N’s debt will be reduced by approximately $250 million and participating lenders will inject $60 million of cash into the business. K&N expects to complete the transaction in the first quarter of 2023.
Once completed, the recapitalization will provide K&N with increased financial flexibility to execute its growth strategies and continue investing in the industry-leading automotive, industrial, and residential HVAC filtration technology that it provides to its customers worldwide. K&N remains committed to its strong vendor relationships and talented team members, which underpin the company’s success and market leadership position. The company’s current initiatives and marketing collaborations remain in place.
K&N also announced that it has appointed Randy Bays as interim CEO, effective Jan. 3, 2023. Bays succeeds Richard Bisson, who is stepping down as the company’s CEO to manage his family office.
Bays has run the company’s operations since joining K&N in March 2022, and brings decades of experience as a business leader with a track record of revenue growth, innovation and operational excellence. Prior to joining K&N, Bays served as the CEO of Kinetek, the president of Sensus and also held numerous other senior-operating positions at both GE and Bowmar Aerospace.
“Over the course of five decades, K&N has built a reputation for exceptional quality and customer service that millions of customers love and trust,” said Bays. “With the overwhelming support of our financial partners and an infusion of new capital, we look forward to continuing to provide outstanding products and services to our customers. We remain committed to serving our customers, supporting our racing partners and enhancing the performance of vehicles across the globe. Upon consummation of the transaction, we believe that K&N will be positioned to capitalize on tremendous growth opportunities both in the automotive aftermarket as well as industrial and residential HVAC markets worldwide.”
“We are pleased to announce the appointment of Randy Bays as interim CEO of K&N,” said Tim Pohl, a member of the company’s board of directors. “Since joining the company, Randy has worked with the K&N team to drive significant improvements in operational performance over the last ten months. Randy is a proven leader with extensive industry knowledge, and we are confident he will continue to execute the company’s strategy, achieve K&N’s business objectives and lead our talented team.”
Pohl continued, “On behalf of the Board, I thank Richard for his many contributions to K&N over the past three and a half years. During his time as CEO, Richard upheld K&N’s reputation as an industry leader while navigating a challenging macroeconomic environment. We wish him all the best in his future endeavors.”
Davis Polk & Wardwell LLP is serving as K&N’s legal counsel, Evercore is serving as financial advisor and Alvarez & Marsal is serving as restructuring advisor. Ropes & Gray LLP is serving as legal counsel and Ankura Consulting Group is serving as financial advisor to an ad hoc group of first lien lenders. Crowell & Moring LLP is serving as legal counsel to the revolving first lien lenders. O’Melveny & Myers LLP is serving as legal counsel and Piper Sandler & Co. is serving as financial advisor to an ad hoc group of second lien lenders.
