Iconic small-engine manufacturer Briggs & Stratton has filed for ‘Chapter 11’ bankruptcy.
The Milwaukee-based company is the world’s largest manufacturer of small gasoline powered engines, having sold over 125 million units. However, it’s been losing money for some time and carried large debt when the economic downturn caused by the coronavirus pandemic hit.
The company was founded in 1908 by Stephen Briggs, an inventor, and Harold Stratton, an investor, and incorporated in 1910. It initially grew by making parts for the booming automobile industry – starter switches were an early core product – small engines for such revolutionary products as washing machines as well as garden tractors, cultivators and generators.
In 1953, it introduced the first lightweight aluminum engine that found a ready market in lawn mowers just as Americans were flocking to the suburbs. The company produced more than 2 million engines a year on average throughout the 1950s.
Briggs had four manufacturing plants in the Milwaukee area at one time. But the company, which was hurt by an increase in foreign competition in the 1980s, also had a history of conflict with labor unions and over the decades moved much of its manufacturing to other states.
Briggs & Stratton lost $54 million in its 2019 fiscal year and $11 million in 2018. The company had short-term debt of $597 million. In June, B&S missed a $6 million interest payment. The board of directors then gave executives $5 million in bonuses (including $1.2 million for company President and CEO Todd Teske) before filing for bankruptcy.
However, this is not necessarily the end for Briggs & Stratton. Chapter 11 is a form of bankruptcy that involves reorganization of debts and assets. Private equity firm KPS Capital Partners LP has entered into an asset purchase agreement with Briggs to buy the company’s assets for approximately $550 million.
“KPS is committed to the expeditious acquisition of Briggs & Stratton to provide certainty of outcome and confidence in the new company’s future. The new Briggs & Stratton will be conservatively capitalized and not encumbered by its predecessor’s significant liabilities.”KPS Capital Partners LP