Thursday, November 29, 2007
The auto parts supplier intends to exit bankruptcy
in January.
DOW JONES NEWSWIRES
WASHINGTON — Dana Corp. has secured a $2 billion deal to fund its exit from bankruptcy, a financing package that will require the auto-parts maker to emerge from Chapter 11 protection by the end of February, the company said.
Toledo, Ohio-based Dana had said earlier this month that it had hoped to emerge from bankruptcy by the end of the year, but Chief Executive Mike Burns said in a statement Tuesday that the company was now set to emerge by the end of January.
“This is a significant step toward our emergence as a strong, financially stable company,” Burns said.
Citigroup Global Markets Inc., Lehman Brothers, and Barclays Capital have agreed to underwrite the financing, according to court documents. The deal consists of a $650 million revolving credit facility and a $1.3 billion term loan.
The financing will expire Feb. 29.
Companies in bankruptcy, including auto-parts makers Delphi Corp. and Dura Automotive Systems Inc., have struggled to secure exit financing as a result of the credit crunch that has severely restricted what was once readily available financing.
Burns said that given conditions in the credit markets, the $2 billion financing “is a strong endorsement of our proposed capital structure and success in implementing our turnaround initiatives.”
Dana filed for bankruptcy protection in March 2006 in the U.S. Bankruptcy Court in Manhattan. It is one of several auto-parts companies that are reorganizing under Chapter 11.
In addition to the $2 billion financing, Dana will fund its bankruptcy exit with $790 million in new equity. Private-equity firm Centerbridge Capital Partners will act as the lead investor. Centerbridge defeated a bid by hedge fund Appaloosa Management to help finance Dana’s bankruptcy exit.
Dana’s reorganization plan calls for unsecured creditors to be repaid 72 percent to 86 percent of the $3 billion they’re owed. They would be repaid with new stock in the reorganized company.
The Manhattan bankruptcy court will consider the $2 billion exit-financing package at a hearing Dec. 5. Dana has asked the court for permission to keep secret the fees the lenders will be paid.