Nemak Parent Buys TK Aluminum Operations

Nov. 2, 2006
$500 million for plants in North and South America, China, Poland

November 3, 2006 -- Grupo Alfa, the majority owner of the Nemak group of aluminum automotive casting operations, has agreed to buy some of the assets of TK Aluminum Ltd., the parent of Teksid Aluminum. The operations to be acquired are in Dickson, TN, San Agustin, Argentina, Betim, Brazil; Nanjing, China; Frontera, Mexico; and Bielsko-Biala, Poland.

Not included in the sale is Teksid's lost-foam casting operation in Sylacauga, AL.

The operations range among permanent and semi-permanent mold casting and pressure diecasting. Among the products produced at the operations are clutch housings, gearboxes, cylinder heads, cylinder head covers, timing chain covers, cylinder blocks, bed plates, clutch housings, engine oil sumps, intake manifolds, timing chain covers, and differential and transmission housings.

TK Aluminum will receive $496.8 million in cash, along with an 11.5% interest in the Nemak business. After the transaction, Nemak business will be recapitalized to have approximately $667 million of debt.

Joachim V. Hirsch, CEO of TK Aluminum, stated: "Combining specific plants with Nemak, a world-class automotive supplier, will allow the new company to continue to best support our customers, employees, and their communities in the future. The transaction will also allow us to continue to focus on restructuring our remaining operations in Italy and France."

With plants in Canada, Czech Republic, Germany, Mexico, and Slovakia, Nemak is a top supplier of aluminum engine blocks and cylinders to global automakers.

Until it was spun off in 2002, Teksid Aluminum was a division of Teksid S.p.A., a Fiat subsidiary. Teksid S.p.A.'s aluminum foundry business was sold to private equity groups that include affiliates Questor Management Company, LLC, CCMP Capital Partners (d.b.a. JPMorgan Partners), Private Equity Partners SGR S.p.A. and AIG Global Investment Corp.

TK Aluminum Ltd. says it is committed to supporting its remaining operations and customers, and has negotiated the support of Nemak during the reorganization. Nemak will provide assistance that includes assuming $7 million in liabilities in connection to the TK Aluminum reorganization, and Alfa has agreed to provide addition credit up to $42 million to replace existing arrangements under the company's senior credit facility, as well as the $25 miillion loan.