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Law360 (May 27, 2020, 12:10 PM EDT ) Italian automotive parts supplier Marelli said Wednesday that it has received funding totaling roughly 130 billion Japanese yen ($1.2 billion) from private equity firm KKR and Japanese banks to help the company weather the economic effects of the coronavirus pandemic.
The financial backing from KKR & Co. LP and "leading Japanese banks" is meant to provide long-term security and flexibility for Marelli in the event the COVID-19 outbreak continues to cause economic hardship for an extended period of time, according to a statement.
"The effect of the COVID-19 pandemic on the global automotive industry has been significant," said Christoph Hobo, chief financial officer for Marelli. "This funding demonstrates the strong support of our shareholder and our banks and their belief in the outlook for Marelli, its people and our overall strategy."
Hobo added that the fresh capital gives the company "the flexibility to withstand an extended market downturn and protects the long-term financial health of the business, allowing us to continue the execution of our strategy with greater certainty and confidence."
Marelli said the new funding is one of multiple steps it has taken to shore up the business and maintain financial flexibility in anticipation of the coronavirus-induced shutdowns. One example is a partnership Marelli entered into on April 30 with Lifenet Healthcare that is aimed at figuring out how to safely reopen Italian companies, according to a statement from the time. Weeks later, Marelli announced it had begun manufacturing face shields to help Japanese health care workers fill their need for personal protective equipment, planning to produce between 600 and 1,800 face shields per day using equipment and machinery in its plant in Yoshimi.
Marelli used to be known as Magneti Marelli SpA, but in May 2019 the company rebranded as Marelli. In March of this year, Marelli announced that its holding company, Magneti Marelli CK Holdings Co. Ltd., was being formally changed to Marelli Holdings Co. Ltd.
Formed in 1919, Marelli operates about 170 facilities and research and development centers across Europe, North America, South America and Asia-Pacific.
It has counted KKR as a shareholder since 2018, when Fiat Chrysler Automobiles NV sold Marelli to CK Holdings Co. Ltd., which is a unit of KKR-backed Japanese auto parts maker Calsonic Kansei Corp. That deal, worth €6.2 billion, created the seventh-largest global independent automotive parts supplier, the companies said at the time. The 2018 transaction was guided by law firms Sullivan & Cromwell LLP and Simpson Thacher & Bartlett LLP.
A representative for KKR declined to comment on Wednesday.
--Editing by Steven Edelstone.
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