With the automotive industry on life support, two local private equity firms are positioning themselves to cash in on what they view as the inevitable recovery.
OpenGate Capital, a global private equity firm based in Beverly Hills, is preparing to overhaul a recently acquired auto parts company at the same time that Platinum Equity, also headquartered in Beverly Hills, is working to buy another car parts company.
OpenGate said last week that it will purchase Gabriel North America, a Brentwood, Tenn., manufacturer of shock absorbers and strut assemblies, from auto parts giant ArvinMeritor Inc. Terms of the deal were not disclosed.
OpenGate, which specializes in maximizing value in noncore subsidiaries, said it will work with Gabriel's management team to expand the company's product range and make its manufacturing more efficient. Gabriel has operations in the United States and Mexico.
"OpenGate is uncovering attractive niche investment opportunities in fragmented and rapidly changing industries," said Andrew Nikou, the private equity firm's founder and managing partner, in a statement.
The acquisition is OpenGate's fourth in the past seven months. Among the deals, the firm acquired TV Guide Magazine from Macrovision Solutions Corp. in a transaction that closed in December.
Meanwhile, Platinum, founded by L.A. billionaire Tom Gores, is facing a challenge from disgruntled lenders to Delphi Corp. over the firm's attempted acquisition of the GM auto parts supplier. Platinum had reached an agreement to acquire the company in a $3.6 billion deal that lenders said was unfairly brokered by the government and undervalues their debt.
A federal bankruptcy judge recently ruled that the competition should be opened up to additional bidders, though no others have yet emerged.
Separately, Platinum announced last week that it has completed the acquisition of the Geesink Norba Group, a manufacturer of trash collection vehicles, from Oshkosh Corp.
California National Bank, which has been contending with low capital levels for months, has received a consent order from regulators directing the bank to raise its capital to acceptable levels.
Among the requirements in the order by the Office of the Comptroller of the Currency, Cal National must bring its total risk-based capital level up to at least 10 percent, the level at which a bank is considered well capitalized.
If it cannot raise sufficient capital, Cal National must develop a plan to sell, merge or liquidate itself, according to the order.
Risk-based capital is a key measure of how much liquid capital a bank has to cover its riskiest assets. At the end of the first quarter, the bank had a capital ratio of just 4.85 percent. The bank's capital levels fell after ill-timed investments in summer 2008 in Fannie Mae and Freddie Mac, the government-sponsored mortgage lenders that have suffered from record mortgage defaults.
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