Hephaestus Holdings Inc., the parent company of Kyklos Bearing International, has apparently failed in its bid to acquire most of the powertrain operations of Metaldyne Corporation, currently operating in Chapter 11 bankruptcy.

Hephaestus is a portfolio company of private equity investors, KPS Capital Partners LP. After Kyklos Bearing, other HHI companies include Jernberg Holdings Inc., and Impact Forge Group Inc.

HHI was approved by the U.S. Bankruptcy Court for the Southern District of New York as the stalking horse bidder for most of Metaldyne's powertrain operations -- all of Metaldyne's Sintered Products, European Forgings and Vibration Controls Products operations located in Europe, Asia, Brazil, Mexico and the U.S. An HHI affiliate agreed to acquire Metaldyne's plants in Bluffton, Indiana and Litchfield, Michigan, and possibly the Twinsburg, Ohio plant.

A stalking horse bid is a binding proposal on a bankrupt company's assets from an interested buyer chosen by the bankrupt company. Once the stalking horse is approved by the court, other potential buyers may submit competing bids for the bankrupt company's assets.

One of the companies rejected as a stalking horse was the Carlyle Group, a private equity investment company.

However, at the auction itself, a bid by MD Investors Corp. carried the day. MD Investors is a new company, bringing together the Carlyle Group, Solus, and Metaldyne's existing 5251R9N7 term lenders.

MD Investors Corp. was selected as the, "best and highest bid."

Tom Amato, Metaldyne's President, CEO, and Chairman, said: "We are very please Carlyle, Solus, and a group of our term lenders have agreed to purchase substantially all of Metaldyne's businesses. It has always been our plan to divest our better performing operations in connection with our overall Chapter 11 restructuring. We believe the sale of these businesses as a going concern represents the best way to continue to serve our customers and preserve as many jobs as possible."

Mr. Amato went on to say, "We are also pleased Metaldyne is moving through the bankruptcy process swiftly and on plan. The highly competitive sale process in this challenging market is a testament to the strength of our businesses, technology and the commitment of our employees."

A special website has been set up to cover Metaldyne's restructuring:

http://www.metaldynerestructuring.com