Citation, Grede Combine Foundry Operations

Citation Corp., Novi, Mich., and Grede LLC have announced the completion of a series of transactions resulting in the formation of a new company called Grede Holdings LLC.

The transactions include the purchase of substantially all the assets of Grede Foundries by Grede LLC (an entity controlled by a private investment fund managed by Wayzata Investment Partners LLC) pursuant to a bankruptcy auction process. The transactions were funded in part by additional equity investment from Wayzata, as well as Citation’s largest shareholder, GSC Group.

The new company will be controlled by Wayzata and will be led by Doug Grimm, the former CEO of Citation. Grimm will be the chairman, president and CEO of the new Grede, which will be headquartered in Novi, Mich.

“The combination of Citation and Grede creates, what we believe is, the most diversified foundry company in North America with one of the strongest balance sheets in the industry,” says Grimm. “We expect revenue to reach $600 million in 2010 through our combined business in the automotive, industrial and heavy truck markets. The significant equity investment from Wayzata and GSC has reduced total funded debt of the two companies by 80 percent, or $110 million. This gives us a best-in-class financial profile, allows us to invest appropriately and weather economic cyclicality moving forward.”

The new Grede has 2,700 employees, 14 foundries and two machining facilities with nearly 600,000 tons of iron casting capacity. The company will have the ability to produce and machine ductile, gray, high-silicon molybdenum and lost foam iron cast component parts and assemblies ranging from 1 pound to 2,000 pounds in size.

“The objective in combining these two great companies is to harness the best of both companies’ people, assets and technologies to provide an unparalleled array of products and capabilities to the iron castings market,” says Grimm.

Employees at the former Grede headquarters in Milwaukee, Wis., will likely relocate to the Novi office or to the Menomonee Falls, Wis., location in 2010.

The new Grede Holdings LLC’s facility roster includes six foundries operated by the former Grede entity in Wauwatosa, Wis.; Kingsford, Mich.; St. Cloud, Minn.; Reedsburg, Wis.; New Castle, Ind.; and Wichita, Kan. There are eight foundry locations that had been operated by Citation Corp. in Berlin and Browntown, Wis.; Brewton, Bessemer, Marion, Columbiana and Selma, Ala.; and Biscoe, N.C.. Additionally, Citation has two machining facilities in Menomonee Falls and Oconomowoc, Wis.