JF Lehman-backed SDI files for bankruptcy

The auto-parts supplier has succumbed to its debt load after failing to refinance $53m on loans. Distressed debt firm Wayzata Investment Partners has bought the company’s debt and will control the bankruptcy process.

Auto-parts supplier Special Devices, a portfolio company of US private equity firm JF Lehman & Co., has filed for bankruptcy after failing to sustain its heavy debt load.

The company, based in California, listed $53 million of assets and $103 million of liabilities in its bankruptcy filing.

Special Devices had about $74 million of senior subordinated notes outstanding and more than $14 million of debt from Wells Fargo Foothill.

Distressed debt firm Wayzata Investment Partners has purchased the company’s debt and has agreed to provide the company with capital as it moves through the Chapter 11 process, Harry Rector, chief financial officer of the company, said in the bankruptcy filing. Wayzata is raising a $2.5 billion distressed debt fund.

SDI was unable to refinance senior subordinated notes issued in 1998. JF Lehman acquired the company in 1998 in a deal valued at $296 million. The firm was founded in 1992 by John Lehman, who served under US President Ronald Reagan as Secretary of the Navy.

The firm focused on investments in the defense, aerospace and maritime industries and makes control investments in lower mid-market companies.

JF Lehman’s operating executive board includes retired General John Abizaid, former commander, US Central Command; retired Admiral Thomas Fargo, former commander US Pacific Command and Commander-in-Chief, US Pacific Fleet and retired General R. Fogleman, former chief of staff, US Air Force.