BOWLING GREEN, KY -- Holley Performance Products Inc., a century-old maker of specialty parts for stock-car and drag-racing, filed for bankruptcy, faulting a late 1990s expansion for saddling the company with too much debt.
Closely held Holley would be taken over by noteholders owed as much as $145.8 million, according to an outline of a reorganization plan filed today in U.S. Bankruptcy Court in Wilmington, DE. The company, based in Bowling Green, KY, listed debts of $243 million and assets of $106 million as of Jan. 28.
In the years following its expansion, “Holley did not generate sufficient cash flows to support the debt incurred,'' Chief Financial Officer Thomas W. Tomlinson said in an affidavit.
Holley and four of its affiliates filed for bankruptcy protection about two years after the company renegotiated the terms on part of the 12.5 percent notes that were due last year. Holley's majority shareholder, funds managed by Kohlberg & Co., quit providing the company the cash it needed to make interest payments, according to court papers.
The reorganization will cut Holley's debt by about $100 million, Tomlinson said in a telephone interview today.
Holley has about 390 employees in Kentucky, California and Mississippi who make carburetor and other fuel and air-systems parts with brand names including Hooker, FlowTech and Nitrous Oxide Systems.
“Employees will not be affected by the bankruptcy, and the company will continue operations as normal,” Tomlinson said.
Holley's customers include Ford Racing and GM Performance Parts. The company is a sponsor of the National Hot Rod Association and has a program that supports the National Association for Stock Car Auto Racing, according to court documents.
The company was founded in 1903 by brothers George and Earl Holley, who designed a carburetor for the Ford Model T called the Iron Pot. Later, Holley built engine parts for planes during World War II, according to the company's website.
Under a deal negotiated with 70 percent of the company's second-lien noteholders, Holley would pay its general unsecured creditors, such as trade vendors, in full and give almost all its equity to the noteholders, according to a description of the reorganization plan, called a disclosure statement, filed today.
Noteholders would get about 45.8 percent of what they're owed under the proposal, which requires a judge's approval.
