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Hart's Rank Group gets into US car parts

Tuesday 30th November 2010

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Fresh from finishing his biggest deal ever, billionaire Graeme Hart has launched another leveraged buy-out, this time for US vehicle replacement parts manufacturer UCI International.

Rank Group, Hart's primary investment vehicle, will pay US$375 million for UCI International, which was to have floated in an initial public offering.

Rank will take on some US$605 million of debt, the company said in a statement.

Hart can also force UCI International to make an offer to redeem the manufacturer's US$235 million of floating notes maturing in 2013.

That's less than a month after completing his US$6.5 billion merger of packaging companies Reynolds Group Holdings with Pactiv Corp., which is now bigger by revenue than New Zealand's two largest listed companies, Fletcher Building and Telecom.

The deal scuppers a proposed float on the New York Stock Exchange to raise working capital and repay the company's debt. Private equity firm Carlyle Group planned to sell 13.3 million shares at a price of between US$14 and $16 a share, valuing the company between US$186.2 million and US$212.8 million.

Carlyle bought about 90% of UCI International in 2003 for some $800 million in cash. Indiana-based UCI International reported annual sales of US$895 million in the year ended March 31, with net profit of US$20.2 million, according to its initial public offer document lodged with the Securities and Exchange Commission in July.

The move into spare auto parts is a new direction for Hart, who has spent the past four years building a packaging empire worth some US$13.8 billion.

If the deal falls through, Rank may be required to pay a $100 million termination fee. It's expected to be completed in the first quarter of next year. No-one from Rank was available to respond to inquiries.

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