Kidde-Fenwal, Inc. (KFI) operates two industrial business lines with over $200 million in sales in 2022. The Kidde consumer and commercial businesses are not a part of the filing, and their operations are unaffected.
KFI currently has a strong liquidity position, with over $100 million in cash on hand, and is not seeking debtor-in-possession financing. During the Chapter 11 process, it intends to operate the business in the ordinary course, consistent with past practices.
In March of 2023, the Board of KFI was reconstituted with a majority of independent directors to initiate a strategic review process in light of the substantial claims against the Company related to aqueous film-forming foam.
KFI manufactured and sold aqueous film-forming foam under the brand name National Foam from 2007 to 2013. Although KFI no longer manufactures or sells aqueous film-forming foam, it has been named in over 4,000 lawsuits arising out of these activities prior to its sale of the National Foam business in 2013.
As part of the strategic review, the KFI Board retained Guggenheim Securities to advise on a potential sale of its business. After considering the available alternatives, the Board determined that commencing a sale process in Chapter 11 is in the best interest of KFI and its stakeholders.
KFI expects net proceeds from any sale will be made available to pay any aqueous film-forming foam liabilities judicially determined to be due and payable. Any sale would be subject to KFI Board and Court approval.
Stephen Hannan, Chairman of the Board of Directors of KFI said:
“This is the right thing to do for all of our stakeholders, including potential aqueous film-forming foam creditors.”
“KFI’s businesses are leaders in their respective markets but require a fresh start to attract capital to continue to grow and innovate.”
“Chapter 11 allows the value of the Company’s business to be preserved and sold at the best possible price, maximizing everyone’s potential recoveries.”
“We will continue to serve our valued customers, suppliers, and employees without interruption as we explore strategic alternatives.”
To assist KFI’s current management team, James A. Mesterharm and Carrianne Basler, both Managing Directors and Partners at AlixPartners, have joined the Company as Chief Transformation Officer and Deputy Chief Transformation Officer, respectively.
KFI also announced that the current owner of the Company, Carrier Global Corporation, has determined that KFI is not a strategic fit for Carrier Global Corporation.
At KFI’s request, Carrier Global Corporation has agreed to provide corporate services to KFI during the Chapter 11 case on arm’s-length terms and to offer certain transition services to any buyer in a Chapter 11 sale.
KFI is being advised by Guggenheim Securities as investment banker, AP Services, an affiliate of AlixPartners, as financial and restructuring advisor, and Sullivan & Cromwell LLP and Morris, Nichols, Arsht & Tunnell LLP as legal counsel. KFI’s independent directors are represented by Schulte, Roth & Zabel LLP.
Kidde-Fenwal, Inc. (KFI) is an industrial fire detection and suppression company that operates two commercial business lines, Kidde Fire Systems and Fenwal Controls.
Kidde Fire Systems is a well known for its development and manufacture of fire detection and suppression systems. They serve a wide range of industries including manufacturing, data centers, commercial cooking, marine, etc.
With a long history of providing standard and custom engineered solutions for many industries, Fenwal Controls offers a broad range of agency-approved gas ignition and temperature controls. KFI was founded in 1987 and is headquartered in Ashland, Massachusetts.
Sources: THX News & Kidde-Fenwal, Inc.