KPS Capital Partners LP has been cleared to buy Hussey Copper, a specialty metal refiner and producer that has been tangled in disputes between turnaround manager Lynn Tilton and the bankrupt investment vehicles she founded, the Zohar funds.
Based outside Pittsburgh, Hussey dates back to 1848, when it was founded as a metal rolling mill. Under the formal legal name of Libertas Copper LLC, Hussey produces electrical copper bar, transformer winding, construction copper sheet and other specialty metal products.
Private-equity firm KPS, which has more than $11.5 billion in assets under management, declined to comment on the transaction, which was authorized by Judge Karen Owens.
Judge Owens is presiding over the bankruptcy of Hussey Copper’s lenders, the Zohar funds, in the U.S. Bankruptcy Court in Wilmington, Del. The deal price wasn’t disclosed, but the Zohar funds stand to collect $17 million to $21 million from the sale, court papers say.
Founded as a way to channel investor funds to companies in need of a turnaround, the Zohar funds are operating under bankruptcy protection and selling businesses, such as Hussey, that owe them money.
Ms. Tilton’s affiliates will collect about $1.5 million as part of a deal that means Hussey’s new owners will get the company free and clear of legal quarrels between Ms. Tilton and the Zohar funds, court papers say.
Among other things, the Zohar funds and Ms. Tilton have been at odds over who owns many of the businesses that borrowed from the Zohar funds, and who has the right to control them. Additionally, Ms. Tilton has sued some companies for alleged unpaid management fees.
For more than a decade, Ms. Tilton managed both the Zohar funds and the businesses, collecting hundreds of millions of dollars in fees. She resigned from managing the Zohar funds in 2016, as they began to default. She resigned from leadership roles at the businesses in March, as Covid-19 pandemic distress slammed the economy, and she suffered a loss to the Zohar funds in a court fight over the sales.
Source: Wall Street Journal
