Marelli in Panne: the maxi-depath, the chip crisis, the duties. Because the first Italian component manufacturer is in crisis. Who will detect it from KKR?

After «almost a year of pit and spring and total clash between the banks prisoner of the 4.9 billion of debt, The agreement was found on the steps of the court, just as the « machine » was about to finish gasoline». To speak is David Slump, CEO of Marelli, who thus describes the situation of the Italian-Japanese company in the letter of accompanying the request for access to Chapter 11 in the United States. During the week, in fact, Marelli asked the Delaware court to freeze the debt situation while working on a radical renovation plan.

The project, approved by over 80% of creditors, contemplates a 1.1 billion-pitted loan to support the activities of the procedure in the months of the procedure Group that has over 10 billion of revenues, 170 production sites and 46 thousand employees in the world, six thousand of which in Italy. At the end of the Chapter 11, unless alternative and better acquisition offers, the ownership of the group will automatically move from the American fund KKR to the creditors, led by the Opportunistic Fund Strategic Value Partners. But how did Marelli end up « in reserve »?

The plans of Marchionne

Magneti Marelli was born in 1919 in Milan from the collaboration of Fiat with the engineer and inventor Ercole Marelli and in the early decades he also produced components for the radio and television sectors. In 1967 Fiat took control of the company, transforming it into one of the largest car components in the world. The turning point arrives in 2017-2018 when the then CEO of Fiat-Chrysler, Sergio Marchionne, decides to scroll (again) Magneti Marelli from the group to « purify the title and create value for shareholders ». The manager therefore evaluates industrial agreements and the distribution of FCA shareholders.

The sale from Fiat to KKR

After the death of Marchionne, however, the company takes another road: that of an auction for the sale in which several funds and the Italian Brembo participate. In the end, in October 2018, it is the US private equity KKR that sprouts it, with an offer of 6.2 billion dollars through the Japanese subsidiary Calso Kansei. Kkr thus brings together the reference suppliers of FCA, Magneti Marelli, and Nissan, Calso Kansei, in a single group named Marelli and based in Saitama (Japan) who, dissolved the ties with the houses, has the ambition to conquer more orders from other customers.

The pandemic

However, the timing proves unhappy because a few months the car industry enters a crisis. In March 2020, first of all, the pandemic blocks industrial activities for months. At the end of the year, the production of cars in Europe and the United States marks a drop of more than 20%. Marelli is forced to proceed with an emergency liquidity injection of 1.2 billion dollars, provided in part by KKR and partly by the Mizuho and Deutsche Bank banks.

The crisis of chips

In 2021, while the health situation seems to turn to normal, the car sector is hit by a new shock. The boom in the demand for chips for PCs and smartphones indispensable for the work remotely saturated the production capacity of semiconductor companies; When after the lockdown, customers return to dealers, the houses discover that their chip orders are the latest in a long tail. The factories stop again and the cars are scarce: In the end, the lack of semiconductors costs the car industry about five million vehicles produced less and an estimated loss of revenues in 450 billion. However, the account is not distributed equally. The houses manage to take advantage of the gap between poor supply and high demand to raise prices and mark useful records. Their suppliers are instead to compete for few orders, in a weak negotiating position that depresses the margins.

In 2022, crushed by a debt of 9.5 billion, Marelli resorts to Japanese courts to find an agreement with creditors who passes through the payment of another 600 million by KKR and for a debt scissor. However, the financial solution proves to be a palliative, unable to treat industrial disease. The company first suffers the increase in costs, then the braking of the transition to electricity, finally the difficulties of its main customers, FCA (which has become Stellantis) and Nissan. In June 2024, thus, Marelli began to have new liquidity problems and Kkr looking for a way out of Marelli. While it carries on for months a tiring negotiation with creditors (and the Japanese government) The company obtains 750 million support from customers in the form of advances on orders (Starentis still boasts credits for 450 million, Nissan for 310).

The credit of the opportunist funds

Thus we come to the present day and the request for access to Chapter 11. The team of creditors has changed. Mizuho and Deutsche Bank are still among the main Marelli debt holders: The first is displayed for 1.6 billion, the second will provide over 800 million of 1.1 billion emergency line. Other institutions, however, have sold the debt to funds specialized in crises: the South Korean MBK, the Americans Fortress and Strategic Value Partners. The latter, Svp, is the main creditor of Marelli, as well as « spokesperson » of the other funds and db. It could thus emerge as a reference member of Marelli at the outcome of Chapter 11, unless they arrive in the next month and a half better offers for creditors.

The Indian track

The Indian Motherson components group (20 billion revenues) has already attempted an approach and could refer to an improvement proposal So he would be studying a capital increase of two billion. But according to sources, a stew of Marelli should not be excluded with some divisions that could be interested in Bosch and others return to Nissan. In short, the situation is uncertain, but Marelli has assured that it will not impact on production activities or employees: Thursday the Court has given the green light to a loan of 519 million that will allow to cope with the commitments. However, the Italian unions are in alarm and asked the government to intervene to save the largest manufacturer of members of the country.