Filed under: Aftermarket, Earnings/Financials
Aftermarket parts maker Holley files for bankruptcy
Most of us on the Autoblog team never restored a classic with our dads in the family garage, thus our connection to aftermarket parts manufacturer Holley is somewhat limited. But we can appreciate the mark that this 100+ year old company and its many brands including Hooker Headers, Earl's, Weiand, NOS and Flowtech have left on the performance aftermarket scene. That's why we're sad to report that the company has recently filed for bankruptcy, citing its rapid expansion in the late '90s as the cause for its downfall. Not all is lost, as bankruptcy for a company in the U.S. just means you get some time to reorganize and pay off your debts, hopefully reemerging as a stronger company in the end. As such, Holley wlll continue to operate as normal for the time being and none of its 390 employees spread across Kentucky, California and Mississippi will be affected. Paying off its debt will likely require the company to give nearly all its equity away to debtors, though those holding notes will only get half of what they're owed if a bankruptcy judge approves the reorganization plan. Thanks for the tip, Tobias!
[Source: Bloomberg]
Reader Comments (Page 1 of 1)
Polly Prissy Pants 11:47AM (2/12/2008)
There was a time when budget hot rodding meant $200 double pumpers and $99 headers. No more. With all the tech in cars these days there's not much room for hot rodding unless you can afford $1200 headers, $8000 blowers and money for a custom tune so you don't trigger the check engine light. So long Holley, it was fun while it lasted.
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3rdgear=heaven 12:01PM (2/12/2008)
Creditors, you mean that it's likely all the equity will go to creditors. Holly is the debtor. Debtor-in-possession.
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3seriesisking 12:02PM (2/12/2008)
I hope they come out all right. I'll never forget putting my hooker heads and Holley four barrel on my first car. 1969 Mustang Fastback........ah the memories.
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phil.gappa 12:18PM (2/12/2008)
They are also feeling the effects of more and better competition, such as Barry Grant, Edelbrock, Comp Cams, etc. Holley needs to be more innovative. They have been chasing most others for quite some time.
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R 12:24PM (2/12/2008)
Maybe they need to expand their product offerings? Call it blasphemy all you want, but they really should look into the import performance scene. Kids seem to have a lot of money to throw at their cars these days.
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Neon Jebus 12:25PM (2/12/2008)
I'm pretty sure Weiand is it's own company now. This is sad news as I work closely with several folks at Holley.
Such a great group of people. Always very friendly and helpful. The Bloomberg article makes this sound more like a way of lowering debt. I hope they recover from bankruptcy very quick.
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Neon Jebus 12:36PM (2/12/2008)
@ R (the reply button isn't working)
Import performance is touchy for a lot of the aftermarket companies. Some companies are still hurting from the sport compact trend.
Everyone in the aftermarket chased that dream way too late. The trend dried up almost overnight.
I know you mean the actual performance side of things (under the hood) and not neon and clear tail lamps...but still.
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KT 1:11PM (2/12/2008)
I'm with you Polly P. Pants. The ol' 750 double pumper was a heck of a carb. Just makes sure you ran a couple of filters in the line 'cause she would clog easy. Maybe it was just my old rusty fuel lines?
A lot of this is probably due to increased competition. Back in the day it was Holley and Rochester quadrajets. Now there are probably 4-5 different carb makers for the hot rod scene. Also, the proliferation of injection systems have lowered their cost and put a big dent in the carb business.
As someone else mentioned, I'm pretty sure Weiand is (was) not owned by Holley. I could be wrong.
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Capone 1:32PM (2/12/2008)
maybe they should have jumped on the import bandwagon and sold turbokits, fart cannons and intake pipes.
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Merritt Johnson 1:41PM (2/12/2008)
A big problem for a lot of the aftermarket parts companies currently is the rise of low quality cheap parts sourced on eBay and such. Many of the brands that put money into R&D and manufacturing get undercut by copycat competitors who take the same design, but manufacture it with lower grade material and less strict tolerances. All many consumers see is the significantly lower price and that is what they go for. It drives real innovation away from the market and hurts core aftermarket companies. The cost to engineer a part that is friendly with all of today's automotive technology is rather expensive. Currently consumers are showing that they are not willing to pay the price for the necessary innovation to keep up with expanding technologies.
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Bill Tich 4:42PM (2/12/2008)
Hello guys, my name is Bill Tichenor and I am the Director of Marketing at Holley. I know the bankruptcy word sounds bad, but Holley is fine. Please read the official press release below and then my further comments below that.
BOWLING GREEN, KENTUCKY, February 11, 2008 - Holley Performance Products Inc. (the Company) announced today that its Owner/Investors have overwhelmingly approved a plan to dramatically enhance the Companys capital structure by converting a majority of the Companys debt into equity.
Thomas W. Tomlinson, the Companys Chief Financial Officer, said today that This is a prudent financial move on the part of our Owner/Investors – it tremendously strengthens our Companys financial position and provides substantial flexibility to invest in our future. This investment will allow the Company to realize its full growth potential and will maximize the value we can return to our investors. The actual conversion of debt into equity will be accomplished through a Prepackaged bankruptcy filing that will cancel-out the old capital structure and formally establish the new one. Customers, suppliers, and employees will not be affected. Mr. Tomlinson emphasized that, It will be business-as-usual at Holley throughout the restructuring process which we expect to be completed in as few as 45 days.
James D. Wiggins, the Companys Chief Executive Officer, went on to say that We are very pleased with the transformation that has taken place here at Holley over the last several years. Today Holley is a lean and focused enterprise with strong customer relationships, significant technological capabilities, and diversified revenue sources. We have established a good track record of profitability and growth in enterprise value. This restructuring represents the culmination of tremendous effort on the part of the team at Holley and we are excited to share news of this successful program with you.
Holley is a leader in the performance engine market, and is used throughout the world in racing, street, marine, and powersports. Holleys family of companies includes the leading brands in the performance market including: Holley, Weiand, Hooker, FlowTech, Earl’s, and NOS.
So, what does this mean to you, the racer/enthusiast/consumer? It means that Holley will be a much healthier company and able to bring you better products, technology and support. This can now be done because we wont be under the same financial constraints of the last few years.
Essentially, what has happened is that the original investment group will transfer ownership to the second tier of investors who were a minority owner. As a result, the debt we now owe is significantly less and puts us in a better position for the future.
This was intentionally structured this way so our vendors, employees and consumers wouldnt be impaired in any way. It will be business as usual; Product will be available as always with no interruption in supply. Race contingency and event sponsorship programs will continue as planned. Technical service support via phone, e-mail and at track is unchanged. All product warranty systems are continuing as normal. New product development is ongoing and we expect to release several exciting new programs throughout the year and at SEMA/PRI.
Thanks for your time.
Bill
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RLQ 4:59PM (2/12/2008)
Indeed.
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Fuzzmanmatt 11:17PM (2/12/2008)
Mr. Tichenor,
I hope you come back and follow up on the comments. I don't represent the views of my company on the whole, solely the views of myself. I work for the number two automotive aftermarket retailer as a parts specialist, and two years ago I was happy to sell your products to my customers. Today, I cannot recommend your products to anyone, and will steer them towards other manufacturers who will meet their needs.
I hope that this gives you the opportunity to look at your customer support, distribution, and product lines. The biggest complaint that I get from my customers who purchase your products comes from warrantee support, which is close to non-existent. I shouldn't have to have a customer who just spent $400 on an intake manifold wait on hold for four hours to get an RMA.
I wish your company luck, and I hope that you don't become another APC.
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Jerry 12:23PM (2/13/2008)
Well ... Mr. Tichenor ... are you there? Perhaps this new window opened by FuzzmanMatt views the inner workings of a bankruptcy format?
Please say something to restore my confidence before I place my next order ... okay?
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Polly Prissy Pants 1:41PM (2/13/2008)
Can someone show me how to do this? I'd love to convert the majority of my debt into equity. Man that sounds sweet.
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mntony 11:14PM (2/13/2008)
Come on people...do you remember Chrysler? Or how about K-Mart? Chrysler came out of bankruptcy much stronger, and so did K-Mart. K-Mart even bought Sears after the bankruptcy! I have every confidence that Holley will be fine, and I plan to purchase their products without fail. If it wasn't for the Barry Grants of the world stealing Holleys designs and calibrations there wouldn't even be other manufacturers out there. The Holley carb is still the premier racing and street carb...when was the last time you saw an Edelbrock on a Pro-stock car?!?
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racedeck 4:19PM (3/01/2009)
I hope the reorganization of this company give them a little breathing room to come out stronger. It is sad to see so many iconic American brands fall.
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