Hoonigan, which is known for its efforts in motorsports, automotive-related merchandise, and automotive media, is going bankrupt.
Hoonigan merged with aftermarket wheel peddler Wheel Pros in 2021 and became the face of that 30-year old company as it rebranded. Now, however, it’s in serious debt and declaring bankrupt.
Where did that debt come from? A glut of acquisitions.
Wheel Pros/Hoonigan bought up a bunch of brands under the guidance of Clearlake Capital. The Autopian suggests that the usual business model of private equity — a scourge upon many industries, in this author’s opinion, is at play, along with the possibility of the company being overleveraged during its buying spree. Meanwhile Motor1 shows that after a period of growth, costs rose and revenue fell. All these things, of course, can be true at the same time in this case.
If you’re worried about Hoonigan going the way of the Edsel, you perhaps don’t need to fret. The company will try to restructure and resume operations over the next two months and will look to discharge $1.2 billion of the $1.75 billion it has in debt, while also getting an infusion of $570 million in capital. This could all come from a Restructuring Support Agreement it has entered into with a majority of its debtholders.
Here’s the company’s statement:
Wheel Pros, LLC (d/b/a Hoonigan) and certain of its North American-based affiliates (collectively “Hoonigan” or the “Company”), a leading provider of aftermarket vehicle enhancements, today announced that it has commenced an in-court financial restructuring process to position it to drive long-term growth. The Company has entered into a Restructuring Support Agreement (“RSA”) with a majority of its debtholders through which it expects to eliminate approximately $1.2 billion of the Company’s debt and secure up to approximately $570 million of new capital, substantially improving the Company’s balance sheet and financial position.
Stay tuned.
[Images: Hoonigan]
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