Winnebago's Suitor Labeled a Pretender
North Street Capital LP, the private equity firm that offered to buy Forest City-based Winnebago Industries Inc. last week, is less than a year old and is “not real,” according to the chief of Spyker Cars, which North Street Capital tried and failed to buy in 2011, the Des Moines Register reported.
Spyker, a boutique Dutch carmaker and former owner of Swedish automaker Saab, announced it would be sold to North Street Capital in September for $43 million, but the deal never materialized. Saab went bankrupt in December.
Emerging from this background of luxury sports cars and business deals across three continents, North Street’s managing partner, Alex Mascioli, and lawyers started writing letters to officials at Winnebago, the iconic but recession-weakened 54-year-old RV maker.
Mascioli said Wednesday that his firm is real. It intends to buy Winnebago for $321 million in borrowed money and start building foreign cars and trucks at the RV company’s factories, he said. He says he has lined up financing and agreements with foreign manufacturers.
Winnebago is not convinced. The company said last week that it had received Mascioli’s offer of $11 per share, but the board decided “it has not received sufficient information to deem the offer as credible.” Mascioli said his lawyer wrote Monday to ask what information Winnebago needs, but he hasn’t received a response.
One obstacle for Winnebago may be the failure of the Spyker deal and the hard feelings it left behind.
“North Street Capital was not real,” Spyker CEO Victor Muller told a blog called “Phoenix — A Future for Saab” in March. “This means they pretended to make a deal, but in fact they could not at all (do) that. They could not provide credible evidence of assets.”
Reached by e-mail Monday, Muller stood by the quote. The Register asked by follow-up e-mail if the quote should be taken as a comprehensive statement about North Street Capital and its role in the Spyker deal. Muller said yes.
“I was quoted correctly and I am of the opinion Mr. Mascioli and his fund (if it really exists) are time wasters,” Muller wrote on Monday.
Failed Spyker deal had global reach
Mascioli shrugs off Muller’s criticism by pointing out the Spyker deal was complicated. He has a point.
The details can sound like a novel by Stieg Larsson, the author of the “Girl with the Dragon Tattoo” series.
Spyker was a Dutch car company tied to luxury cars and World War I airplanes that went out of business in 1925. Muller revived the brand in 2000 but struggled to make money through the first decade of the new millennium, before he bought Saab in 2010 from General Motors, said Jens B. Nordstrom. Nordstrom is an economics reporter for the Swedish television network TV4 who is working on a book about the Saab bankruptcy.
By the time North Street was negotiating to buy Spyker, Muller had attracted a long list of investors and creditors, and Saab was going bankrupt. Mascioli wanted to buy Spyker from the larger company that it had formed. Saab was sinking fast. Chinese companies were involved. General Motors had a say because of technology licensing. A Russian lender had a stake in Spyker. And Muller had investors from both Abu Dhabi and the Netherlands.
“That was a deal that was extremely geopolitically complex, and it can’t be summed up in a quote or a simple story line,” Mascioli said.
The Register asked Winnebago this week whether there was anything new to report, and whether the ultimate failure of the Spyker deal had come to Winnebago’s attention.
“No, we don’t have anything new to report,” wrote Sheila Davis, spokeswoman for Winnebago. “Yes, we are aware of the experience with Spyker.”
Auto exec: Deal would benefit Iowa
North Street Capital LP is listed as a corporation in Delaware. The firm’s website says it specializes in leveraged buyouts, or deals where the buyer borrows money to purchase a company. North Street lists its core markets as automotive, consumer, retail and business services.
Mascioli said North Street has done deals. He wouldn’t get specific. He doesn’t have to, since the company is privately held and has less than $150 million in assets, he said. Its hedge fund manages less than $100 million and its private equity arm less than $50 million, Mascioli said.
Mascioli enlisted Duke Hale as a managing director for North Street in February. Hale, an executive over the past 30 years at Volvo, Mazda, RV maker Starcraft and British sports car company Lotus Cars, lives in Indianapolis and runs an automotive consulting company and an insurance agency. Coincidentally, Hale was in West Des Moines in April for a training session at Aviva USA.
Hale said North Street is working on agreements with car and truck companies in Asia to assemble their vehicles in the U.S., which is why the firm wants to buy Winnebago.
“It’s beyond initial dialogue,” Hale said of the agreements in Asia. “I call it a framework agreement.”
Final assembly of car and truck kits from overseas would create jobs at Winnebago’s factories in a time when the RV business is lagging, Hale said.
“It seems to me that it would be good for Iowa,” he said.
At Winnebago, on the southwest side of Forest City, it’s been a slow recovery since 2009, when the RV maker posted a $78.8 million loss. The company turned an $11.8 million profit in fiscal 2011, which ended in August. But then it posted a loss in its most recent quarter of about $900,000.
The recession and its aftermath have been hard on the RV business. More pressing financial matters dominated the attention of consumers, especially retirees, and tighter lending standards have made it more difficult to get a loan to buy an RV. Companywide sales in fiscal 2011 were $496.4 million. That’s up from the two years before, but since 2004, sales have been clobbered 55 percent.
The company, which employs 2,000 people in Iowa, has tried to diversify. In 2010, Winnebago bought a company called Sunnybrook RV that builds towable RVs. That factory is in Middlebury, Ind.