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FORT WAYNE, IND. -- Bankrupt Tokheim Corp. said it has an agreement to sell its North American operations to an affiliate of First Reserve Corp., a Greenwich, Conn.-based private equity investor specializing in the energy industry. The Fort Wayne-based gasoline pump manufacturer also said it has a letter of intent from European firm AXA Private Equity for the purchase of its international operations.
Tokheim filed for Chapter 11 bankruptcy protection on Nov. 21 to help engineer a sale of the company. First Reserve is the largest shareholder of Dresser Inc., parent of Dresser Wayne, a Tokheim competitor and favorite suitor, the The Journal (Ind.) Gazette reported.
Tokheim, in its announcement, did not name the First Reserve affiliate. Wayne spokeswoman Dee Ann Campbell has said her company is interested in Tokheim but declined to comment.
But another suitor said the competition has only just begun. Fort Wayne-based investment firm Ruffolo Benson LLC is negotiating to acquire Tokheim's North American operations, excluding the Lansdale, Pa.-based Gasboy subsidiary, on behalf of some senior Tokheim executives.
The bankruptcy judge will receive competing bids for Tokheim, and Ruffolo Benson intends to make an offer, partner Bix Benson said. "However, as [the sale] process drags on, the value of Tokheim North America will continue to erode as it loses key employees and customers," he said.
Tokheim is seeking approval of bidding procedures to conduct a sale auction of its North American operations. The company said it has until March 14 to identify the successful bidders and until March 24 to close the transactions, according to the report. The manufacturer, which until last month employed about 500 people in Fort Wayne, has laid off about 70 hourly and salaried employees in recent weeks. All transactions are subject to approval of the U.S. Bankruptcy Court for the District of Delaware.
"First Reserve and AXA Private Equity represent excellent candidates to provide a smooth transition for our customers and the majority of our worldwide employees," Tokheim President and CEO John Hamilton said in a statement. "We are working through the bankruptcy process with our various constituencies to complete this sale process as quickly as possible. Our goal is to smoothly transition our businesses into the hands of new owners."
Several bidders have expressed interest in the financially crippled company. Franklin Electric Co. has been mentioned as a suitor for Tokheim's Gasboy subsidiary, although the company said it does not confirm or deny acquisition candidates. The Bluffton, Ind.-based company is a major supplier of electric motors to Gasboy.
Tokheim's former president and CEO, Douglas Pinner, also is reportedly interested, although he has declined to comment.
Tokheim's bankruptcy filing, its second in less than three years, has dealt a financial blow not only to suppliers -- some of whom might never get paid -- but to hundreds of its workers, the report said.
Payment of wages earned by employees within 90 days of the bankruptcy filing will be capped and withheld until the gasoline pump maker works its way out of Chapter 11 -- a process that could take more than a year, Tokheim said in a memo to employees obtained by the The Journal (Ind.) Gazette.
The delay in payment is a "draconian" move and offers employees yet another reason to leave the company, said Benson, of the local investment firm Ruffolo Benson. This will make it harder for any future buyer to turn the company around, Benson said. "To successfully resurrect Tokheim's North American operations, it is important that employees stay," he said.
Employees have also seen their retirement savings plan shrink because of the bankruptcy, the report said.
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