Skip navigation
Newswire

UPDATE 1-KPS sells New Flyer bus maker to other funds

(Adds details throughout)

NEW YORK, Dec 16 (Reuters) - KPS Special Situations Fund said on Tuesday it agreed to sell bus maker New Flyer Industries to two other private equity funds for "a significant multiple" of its original investment.

KPS, a $500 million fund group that specializes in buying distressed assets, didn't disclose the terms of the agreement. But industry sources said New York-based KPS would receive about $300 million, a substantial gain on the $28 million it invested in March 2002 for a controlling stake in New Flyer, North America's largest bus maker.

The buyers are Harvest Partners Fund IV and Lightyear Fund, which both specialize in midmarket deals, generally considered $100 million to $500 million in value.

Winnipeg, Manitoba-based New Flyer makes about 2,000 buses a year for cities including New York, Los Angeles and Atlanta. It has sales of more than $470 million a year.

The company has undergone "a dramatic business turnaround" over the last two years, KPS said.

"The management executed the turnaround extremely well, but there is still a lot of opportunity going forward," said Ira Kleinman, senior managing director of Harvest Partners, a New York buyout fund with about $1 billion under management.

Harvest's partner in the deal, Lightyear Capital, has about $750 million under management and was founded by former PaineWebber Chief Executive Donald Marron.

Goldman Sachs ran the auction for New Flyer.