Why Lynn Tilton may be selling Dura Automotive

Lynn Tilton: Preparing to auction off Dura? Photo credit: JOE WILSSENS

Financier Lynn Tilton is working with Jefferies Financial Group Inc. to seek buyers for auto supplier Dura Automotive Systems Inc., people familiar with the matter told Bloomberg, as she looks to unload some of her investment firm’s holdings to repay creditors.

Dura, owned by Tilton’s Patriarch Partners, could fetch about $1 billion, said the people, who asked not to be identified because the matter isn’t public. Jefferies is preparing Dura for an auction likely to draw interest from private equity firms and other auto-parts suppliers, they said.

A representative for Jefferies declined to comment while representatives for Dura and Patriarch didn’t respond to requests for comment.

Legal settlement

Dura comes to market after Tilton reached a legal settlement in May with bond insurer MBIA Inc. The agreement involved three bankrupt investment funds Tilton and MBIA had created to originate loans for distressed companies owned by her turnaround firm.

Tilton agreed to step aside as head of the funds for at least 15 months, according to court documents. She can resume her position if she can repay MBIA and other creditors with proceeds from selling or refinancing some of her portfolio companies. The documents don’t publicly detail which ones.

Tilton has 25 operating companies, including Dura, MD Helicopters Inc. and Rand McNally, she said in a bankruptcy court filing in March.

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