RealTruck Seeks to Assure Lenders After First Brands Debt Hit
Auto Parts Supplier Faces Slump in Its Debt to Distressed Levels
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Auto parts manufacturer RealTruck Group Inc., facing a slump in its debt to distressed levels, told lenders it uses fundamentally different financing tools from those tapped by First Brands Group, another parts maker that collapsed into bankruptcy last month.
RealTruck has no factoring arrangements, doesn’t participate in supply chain finance and has no “material” off-balance-sheet liabilities, the company said in a notice to lenders seen by Bloomberg News.
Its bonds due in 2029 are trading at about 60 cents on the dollar as of Oct. 15 in New York, a roughly 10-cent drop over the past month, according to data compiled by Bloomberg.
A representative for L Catterton, which is among the controlling investors in RealTruck, declined to comment.
RealTruck is under pressure from tariffs and concerns over the health of the auto parts market in the wake of First Brands’ collapse. Formerly known as Truck Hero, RealTruck designs, manufactures and sells accessories for trucks and off-road vehicles.
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First Brands filed for Chapter 11 last month amid concerns around its earnings and the use of off-balance-sheet financing known as factoring.
“Considering recent industry events prompting focus on supply chain finance programs, we would like to confirm that RealTruck does not, as a matter of practice, factor receivables or participate in supply chain finance programs,” according to the notice sent to lenders. RealTruck didn’t name First Brands in the memo.
RealTruck has $600 million of bonds due in 2029 and a $1.55 billion leveraged loan, according to data compiled by Bloomberg. Its loan was trading at 86 cents on the dollar on Oct. 15 in New York, down from about 91 cents a month ago.
The direct impact of U.S. tariffs on RealTruck is manageable, as most of its products are exempt under the U.S.-Mexico-Canada trade agreement, S&P Global Ratings said in a report in May.
However, the levies are set to put pressure on U.S. consumers, which could lead to reduced revenue for the company’s discretionary products over time, according to the report.
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The ratings firm said it expected RealTruck’s revenue to fall as much as 5% and leverage to grow above 10 times earnings before interest, taxes, depreciation and amortization by the end of this year.
RealTruck also tried to assuage lender concerns about a factory fire at Novelis, an aluminum supplier, saying it’s not directly affected, according to the notice.
L CattertonacquiredRealTruck in 2021 alongside a consortium of investors including the Abu Dhabi Investment Authority, Mubadala Investment Company and StepStone Group Inc.
Written byReshmi Basu, Luca Casiraghi and Dorothy Ma
