If you’ve been working on your own cars for a while, you’re probably familiar with brands you’d find at auto parts stores. Boxes labeled Fram and Centric and Raybestos containing reasonably priced parts fit for daily drivers are staples for regular wrenchers. Well, those brands just hit by a big bow wave, because their owner, First Brands Group, has filed for Chapter 11 bankruptcy protection.
First Brands is pretty huge. In addition to owning Fram filters and Raybestos brakes, the group also owns brake brands Centric, Carlson, and International Brake Industries, towing equipment brands Bargman, Bulldog, Draw-Tite, Fulton, Reese, Tekonsha, Wesbar, and the towing division of Westfalia. It also owns windshield wiper brands Anco, and Trico, holds the licence for Michelin wiper blades, owns remanufactured parts giant Cardone, lift support brand Strong-Arm, and the LED division of Philips, along with Airtex, Autolite, Carter, Luberfiner, Hopkins, and Petroclear. If you own an older car with third-party parts on it, there’s a good chance at least one of them was manufactured by or for First Brands.
The privately-owned auto parts group started life when Cleveland-based Crowne Group LLC (also privately owned) purchased wiper blade company Trico in 2014. The company already had experience in the auto parts field, so it seemed like a good fit. It took a steady five years for the first serious expansion of that arm to happen by way of acquiring Fram in 2019. Shortly after that, the two subsidiaries were bundled together under the First Brands banner, and that’s when the current course was charted.
For anyone following recent bankruptcy protection filings in the automotive space, it shouldn’t be surprising to learn that the streak of acquisitions accelerated starting in 2020. On July 31, 2020, First Brands announced it had purchased both Raybestos-owner Brake Parts Inc. and Luberfiner manufacturer Champion Laboratories for undisclosed sums. As Chief Marketing Officer Guy Andrysick stated in a media release at the time, “Both Raybestos® and LuberFiner® are important and natural complements to our current vehicle maintenance and vehicle repair product solutions.”
Less than six months later, First Brands announced that it had purchased Centric, an enormous brake parts company with applications for just about everything, and brands at every price point. There’s C-Tek for budget-conscious drivers, all the way up to performance brake parts brand StopTech. A figure for this acquisition was not disclosed, but that’s the way it goes with companies that aren’t publicly traded.
In 2023, First Brands bought Horizon Global, a group that owned an absolute shedload of towing parts companies including Draw-Tite and Reese. Since Horizon Global was publicly traded, we have a lot more information on this acquisition, chiefly that the change of ownership involved a cash tender of $1.75 per share. With 27.73 million shares outstanding, we’re looking at around $48.5 million.
Those sort of huge acquisitions require serious cash to close, and most companies don’t have eight or nine figures in the bank earmarked for expansion. Instead, they often rely on outside financing to raise funding, and debt’s modest cost of capital keeps financing cheap. However, if that debt can’t be paid back within a prescribed timeline, that’s when things go really wrong. Earlier this month, cracks really began to show. On Sept. 25, the Financial Times reported that First Brands’ financing vehicle Carnaby Capital Holdings had filed for Chapter 11 bankruptcy protection in Texas.
Entities tied to First Brands Group and its founder Patrick James have filed for bankruptcy protection in the US, compounding issues at the car parts supplier whose troubles have roiled credit markets.
Carnaby Capital Holdings and several entities that raised debt linked to First Brands filed for Chapter 11 proceedings on Wednesday, raising the likelihood that the business is itself on the brink of bankruptcy.
First Brands, a US maker of windscreen wipers and fuel pumps, has come under intense scrutiny for its use of off-balance-sheet debt tied to invoices and inventory. Some lenders fear this financing was poorly disclosed in the main operating entity’s balance sheet, making it difficult for creditors to know how much debt it had in total.
Allegations of financial opacity aren’t good, and it gets worse. The Carnaby Capital Holdings filing claims that this group of special-purpose financing vehicles tied to First Brands holds more than $500 million in assets and more than $1 billion in liabilities. If that’s just a subsidiary, what are things looking like for the crown jewel?
It turns out we didn’t have to wait long to find out how ensnared First Brands Group was in debt. Just a few days after Carnaby Capital Holdings filed for Chapter 11, First Brands did the same. As Reuters reports, “First Brands, which filed for bankruptcy in the Southern District of Texas, disclosed assets exceeding $1 billion against more than $10 billion in liabilities.” The outlet reports a total of around $6 billion in debt to be restructured, a sum that’s simply unfathomable to many.
So, what happens next? Well, Chapter 11 means that a reorganization effort will be the first thing attempted, rather than Chapter 7, where a company gets stripped of assets and dismantled to pay its creditors. Indeed, First Brands stated that it’s secured $1.1 billion in debtor-in-possession financing from its first-lien lenders to keep the lights on while this whole thing goes down. As a result, it’s unlikely that both OEMs relying on Fram and Trico parts for their new vehicles and DIY-ers looking for reasonably priced car parts will be in a pickle, at least in the immediate future.
However, the bankruptcy filing of First Brands seems to be yet another cautionary tale on the limits of feasible growth. The group piled on both acquisitions and debt in a manner that likely ended up being too quick to be sustainable, and this is the result.
Top graphic image: Fram
Support our mission of championing car culture by becoming an Official Autopian Member.
Well, it looks like Mr. Creosote (First Brands group) just had his Wafer Thin Mint! 😉
for reference: https://www.youtube.com/watch?v=uRpt4a6H99c
waffer thin
Perhaps he should of stuck to something from the Autolite selections and stop Fram-ing food down his own throat.
The PE shell game falls apart pretty quickly if something happens at the top.
So this is why 7317 is never on the shelf!
Me: First Brands can’t have my brand in there, I have special brands.
Some infographic: Look, look with your special brands
Me: MY BRAND!
As much as I hate PE consolation and MBAs in general. I’m not sure these particular finance bros / “business experts” can be blamed for the downfall of those brands. Fram the big joker of them all has been dangerous for over 15 years. I’m fairly sure trico was overcharging and underperforming before 2014. And last time I got rayspestos brake pads post 2020 they seemed fine.
Alot of that stuff is made in Mexico so when your free trade turns in to turns into tarrif and you have long term fixed price contracts that puts you in a very tight spot.
I’ve also noticed a lot auto parts stores changing manufacturers or brands on several things rather recently that used to be made by one of their brands. If they did try to jack up prices on the stores and they went elsewhere then I guess it could have been their fault. As less people work on cars those brand will mean and be worth less and less. The guys in the business of fixing cars don’t care about brands they care about service, price, and quality to an extent. Most of the time they will use the house brand of whatever auto parts store they use the most. Unless they find that is a problem or OEM parts of electronics. Whatever is the least headache.
I’m a little disappointed by all the Fram hate on here unless they have taken a turn for the worse pretty recently (possible, but I can’t find any evidence to support that). All the oil filter dissections I’ve seen indicate they’ve been making high quality filters for at least a decade at this point. I know they were “glued together paper junk” before that, and I too began my automotive maintenance career avoiding them at all costs. But they definitely cleaned up their act and became my go-to brand for a widely available quality filter at a reasonable price. Sometimes brands change for the better, and we should be just as open to that as to finding out a once quality brand is not anymore.
Fram user for 55 years. Never a problem.
I actually prefer the Fram filters with their “Sure-Grip” coating. I change the oil every 3000 miles on our daily drivers and at least every two years on our rarely-driven vehicles and I’ve used Fram filters for the last 20 years or so and have never had a single problem with them.
I used to joke on BITOG that if Fram was as bad as characterized, the roadsides of America would be clogged with failed cars from Fram induced failure.
I know of a fram oil filter blowing up a year ago. So I don’t think they have changed all that much. That’s why most people won’t run them. My dad was a hard core fram guy for decades I told him to stop he didn’t one blew up on him while on an interstate he said never again.
I can’t say I’ve cut open a filter I knew was a Fram in some time. Last one I opened was a “Subaru Blue” which I think was manufactured by Fram for Subaru, but I only think that. However once you open up a Fram filter and see how shoddy it is (I have done this, not relying on YouTube or whatever) what leads you back to trusting the brand again? Especially with something as important as an oil Filter?
The whole corporate-salad thing needs to stop. Half the clothing brands in the mall were owned by one company. The majority of brands in grocery stores are owned by a handful of companies like Unilever and Kraft. The mortgage salads led to the mortgage crisis in 2008. Bigger is not better for brands and consumers, too many eggs in one huge basket.
Yeah, that’s the reason I can’t get my Frusen Glädjé anymore, Unilever didn’t want to keep making an internal competitor to Ben & Jerry’s
Back in the early to late 1980s I would sometimes bump into professionals that worked at Fram’s R&D (&production) center in Rhode Island. Back then their products were top notch and they benchmarked all their competitors to make sure they were leading the market. This was at least 3 corporate owners ago, so it is likely their quality has gone down. I still like the orange trade-dress, their products definitely stand out on the shelf.
Pedo Trump’s messing with the economy strikes again!
Another fine addition to Holley’s collection of every single automotive aftermarket company.
Side note, I run those Raybestos E3 brake pads on the front of my 4Runner, they’re fantastic. Great bite and little dust, and after about 40K miles they still look to be at about 50% life.
Agree – I have them on 2 of my cars. They’re quite good.
Overleveraged company goes on a spending spree acquiring other small companies to become huge – then business climate changes and the interest payments can’t be made anymore.
The ones who walk away making money on this carnage are the M&A guys, the Attorneys and the C-Suite.
If the business is to survive – production goes to cheaper suppliers from China, Malaysia, etc.
Employees, shareholders, bond investors and customers are all left holding the bag.
We’ve all seen this hundreds of times before.
I will never understand the insatiable urge to buy up other companies. Money, I get that, but, it just seems like a headache. Don’t these people have hobbies? They have all this money, can’t they find something better to do than mismanaging companies into bankruptcy?
I’m putting money on the glut of MBA’ers out there that have been educated on this way of thinking, over the years
And funny thing is EA games just got bought out by the Saudi’s and Jared Kushner. Gotta love it rich get richer by pushing out slop and running companies into the ground.
Yeah as if EA wasn’t crappy enough already. This acquisition is going to be terrible.
Yeah they have been mostly terrible with a few good games here and there lately but yeah this just seems like dead man erm company walking.
Because more is never enough.
I know. And that’s where I am different. I don’t find it fun to do more things but do them worse.
Making money at the expense of others and a few companies while creating nothing isn’t doing it worse.
It’s doing it “Late Stage Capitalism 2.0”
This sort of thing is so common in most name brands now.
The need to become bigger and to control markets and market share is largely driven by greed at the top corporate level, especially in privately owned firms. Yet it also thrives in the publicly traded firms as well.
There’s a ton of money to be made in shady ways.
That quote from Chief Marketing Officer Guy Andrysick was not from a press release, but from a speech. The guy actually managed to say out loud both “®” characters.
Dude be failing captchas in real life.
P. S. Have to admit that I only realized his title wasn’t “Chief Marketing Officer Guy” halfway through my comment.
Besides the loss of Champion labs (makers of many OEM oil filters and Purolator in North Carolina) I don’t see where there’s a problem here. Centric had a nice thing going for a while until they were acquired and quality went out the window. The rest of these ‘brands’ are somewhere between “use if in a pinch (Reese, upper tier Fram)” and “better off going to the junkyard”
Really tired of these MBA types trying to consolidate every possible competitor and push worse product for same or more money
I’ve had good experience with Tekonsha brake controllers, and in particular the company’s tech support. To your point, every other First Brand brand has equal or superior alternatives, IMHO.
It’s a shame for workers who had no say in the matter.
Indeed, the Tekonsha relay systems are decent quality. Fram has been the bigger failure story in recent times though. YouTube testers kind of killed them.
Precisely.
Auto-Lite batteries are pretty good quality, you only have to top up the water three times per year
I’m just glad that it wasn’t Callahan Auto Parts that went out of business. I’m a lifelong customer.
I’m not sure you can trust them. There’s no guarantee written on the box.
hey, you could get a guarantee on the quality of your steak by sticking your head up the butcher’s ass, right?
Pretty Sure Ray Zelinsky is the CEO of First Brands though.
Make sense, an auto parts retail chain with its own manufacturing plants builds a 34 story skyscraper headquarters in the heart of Chicago, and fills a chunk of its prime upper floors with a windowless product testing facility. They’re obviously not a company that’s smart with money
Rolls-Royce of brake pads. Brings a tear to my eye just thinking about them.
Never big on fram but loosing some of the others would definitely suck.
all driven by greed.
Reading between the lines, private company leverages debt to buy other companies, they continue at their normal value, debt price goes up, company goes under. No one wins except the lawyers who set up the purchases, and now the bankruptcy and the CEO who probably quit 4 years ago.
When do they get a government bailout?
Fire sale.
To be split, purchased up in bits, and consolidated with deep cuts to the workers and replaced with inferior product.
Fram is already an inferior product though.
There is no limits to “inferior”.
“This is just an empty soup can with Fram written on it in Sharpie.”
They could at least let you keep the soup.
COTD right here
Thanks!
They’d probably be mad at you for not using an off-brand marker.
That’s why it works so much better than a regular Fram.