New debt: The traffic on Brooklyn Bridge Blvd in New York City. Clarios, which produces a range of items from low-voltage to vehicle and industrial products, says its batteries are used in one in three cars on the road globally. — AFP
NEW YORK: Clarios International Inc is considering taking on new debt in order to hand cash to its owners, including Brookfield Asset Management Ltd and Canadian pension fund Caisse de Depot et Placement du Quebec (CDPQ), according to people familiar with the matter.
The Wisconsin-based car battery maker is planning to raise several billion dollars for a so-called dividend recapitalisation, which could be one of the biggest over the past year, the people said.
Clarios aims to complete the deal by the end of this quarter and pay a special dividend to its shareholders with the proceeds, the people said, asking not to be identified as the information is private.
Clarios filed for a US initial public offering (IPO) in July 2021, about two years after Brookfield and CDPQ acquired the business from Johnson Controls International Plc for roughly US$13bil. Clarios withdrew that IPO registration on Monday.
The company is now valued at about US$20bil after its earnings before interest, taxes, depreciation and amortisation grew by about US$600mil under the new ownership, the people said.
A more favourable credit market has enticed the Clarios owners to a dividend recapitalisation plan after exploring options including a potential stake sale, the people said.
Following the deal, Clarios’s gross total leverage could rise to about six times its adjusted earnings before interest, taxes, depreciation and amortisation in the latest financial year, the people said.
Shareholders remain open to a partial stake sale in the future, according to the people.
Clarios produces a range of battery products from low-voltage to vehicle and industrial products. Its portfolio of brands includes Varta, LTH and Heliar.
The company said its batteries are used in one in three cars on the road globally.
The Brookfield-CDPQ consortium has repaid more than US$2bil of Clarios’s debt since the takeover in 2019, the people said.
Deliberations are ongoing and Clarios could still change its plans, the people said. Representatives for Brookfield, CDPQ and Clarios declined to comment. Clarios employs around 18,000 people in more than 100 countries.
Its chief financial officer, Helmut Zodl, joined in September 2023 from GE HealthCare Technologies Inc.
He replaced John Di Bert, who left earlier in the year to take up a role at Air Canada.
Clarios in October made a strategic investment in Swedish sodium-ion battery developer Altris.
A Brookfield-led consortium completed its purchase last month of a majority stake in French renewable developer Neoen SA, paving the way for it to make a tender offer for the remaining stock.
Brookfield chief executive officer Bruce Flatt said the investment firm expected a faster pace of exits across several businesses in 2025 amid improving liquidity in the market. — Bloomberg
