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Oliva Mantock

On 11 November 2022, M2 Capital made a tender offer to acquire 100% of Superior Industries’ outstanding shares at $5.85 per share, a 40% premium over the last six month average share price of $4.18, and a 36% premium to the closing price of $4.29 per share on 10 November 2022. Per the press release, the tender offer will be fully funded by cash.

Notably, S&P downgraded Superior Industries on Thursday night (10 November 2022).

Superior Industries’ principal business is the design and manufacture of aluminium wheels for sale to original equipment manufacturers in North American and Europe. M2 Capital previously offered to purchase Alvance Aluminum Wheels (the largest aluminium wheels manufacturer in France) in the summer of 2021, the acquisition appears to be pending approval by bankruptcy administrators.

Based on our analysis, if M2 Capital’s tender offer is accepted, the acquisition would constitute a Change of Control under Superior Industries’ outstanding Notes, which would entitle the bondholders to exercise their 101% put right.

However, the bonds non-call period ended in 2020, and the Notes have been redeemable at par since 15 June 2022. Therefore, to get around the required change of control offer, we assume the Issuer will simply redeem the notes at 100%.

€250m 6% Senior Notes due 2025 (the “Notes”) ($213.0m outstanding as of September 30, 2022)

$349.2m Term Loan Facility (as of September 30, 2022)

$12.8m Equipment Loans (as of September 30, 2022)

$216.8m Redeemable Preferred Stock (as of September 30, 2022)

The Change of Control provision in Superior Industries is standard, and the relevant provisions define “Change of Control” as:

the disposition of all or substantially all of the assets of the Issuer and its Restricted Subsidiaries to any Person other than the Permitted Holders; or

any Person or group other than the Permitted Holders becomes the beneficial owner of > 50% of the total voting power of the Issuer’s voting stock

Since M2 Capital is acquiring 100% of Superior Industries shares, we are looking at the second limb of the Change of Control definition above, specifically the definition of a “Permitted Holder”, which includes: “TPG Capital, L.P. and any Affiliates and/or funds or partnerships managed or advised by any of TPG Capital, L.P. or any of its Affiliates but not including any portfolio company of any of the foregoing”.

M2 Capital is a boutique private equity firm that is not, as far as we are aware, affiliated with TPG Capital. So M2 Capital’s offer to acquire Superior Industries, if it were to go through, will constitute a Change of Control under Superior Industries’ Notes.

The Notes have traded sharply upwards on the news, from 81.979 yesterday to 95.69 as of publication.

Superior Industries — CoC Analysis

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