Fenix Parts Inc., a recycler and reseller of original equipment manufacturer (OEM) automotive products, has entered into a definitive merger agreement with Stellex Capital Management LP under which a Stellex-controlled affiliate would acquire the company for 40 cents per share in cash along with the assumption of more than $40 million in operating and long-term liabilities, including $33 million of indebtedness.
The per share cash consideration under the merger, which has been unanimously approved by the company’s board of directors, represents a premium of approximately 56 percent to the 60-day volume-weighted average stock price as of Feb. 9, the last trading day prior to the announcement by Upstate Shredding LLC of an unsolicited, non-binding offer for the company.
The merger agreement is subject to shareholder approval. The deal is expected to close in the second quarter of 2018.
Kent Robertson, CEO of the Fenix Parts, said, “We are pleased to announce this definitive merger agreement with Stellex following a long and exhaustive strategic review process, which included multiple offers from both strategic and financial entities that ultimately fell apart. Throughout this process, the company’s financial condition has continued to deteriorate due to ongoing liquidity constraints, which limited the company’s car-buying activity and the impact of a fire in April 2017 at our Toronto facility. As a result of continued negative cash flow from operations and the current liquidity situation, including the continuing default on our senior secured credit facility, there was significant doubt that the company could remain a going concern, limiting our options to move forward with the business. Due to all of these factors, the board believes this offer from Stellex represents the best opportunity for shareholders to maximize value.”
In March 2017, the company engaged Stifel to advise the board and the company management and to assist in pursuing a range of potential strategic and financial transactions to provide the Fenix with improved liquidity and maximize shareholder value.
Stifel is acting as financial adviser to the company and Duff & Phelps LLC rendered a fairness opinion to the board of directors. Johnson & Colmar is acting as legal counsel to the company and Mayer Brown LLP provided legal advice to the special committee of the company’s board of directors. Dentons US LLP is serving as legal counsel to Stellex.
