From the Wall Street Journal...
Dana Corp. filed for Chapter 11, making it the latest automotive supplier to seek bankruptcy-court protection.
The Toledo, Ohio, company, which makes brakes, axles and other parts, listed $7.9 billion in assets and $6.8 billion in debts. Dana said its bankruptcy filing was prompted by declining revenue associated with a downturn in the U.S. auto market along with increases in commodity and energy prices. The filing was entered in the U.S. Bankruptcy Court for the Southern District of New York.
"The general financial condition of the industry, together with Dana's inability to renew or expand its credit facilities in a timely manner, has significantly constrained Dana's liquidity," the company said in a statement.
Dana's shares plunged this week after the company failed to make bond coupon payments Wednesday worth $20.8 million. Standard & Poor's and Moody's Investors Service, the two main credit rating agencies, both downgraded their ratings of Dana on Thursday. Fitch Ratings did likewise on Friday.
The company said it has secured a $1.45 billion debtor-in-possession loan provided by Citigroup, Bank of America and J.P. Morgan Chase to fund its operations during its bankruptcy case. Dana will continue operating and said filing for Chapter 11 should provide it with access to necessary capital to implement its business plan and complete the restructuring it began before the bankruptcy filing.
"All of this will enable the debtors to maintain a strong employee and customer base and thereby preserve their position as a leader in the engineering, manufacturing and distribution of automotive, commercial vehicle and off-highway systems and components," Dana Chief Executive Michael J. Burns said in court papers filed with the bankruptcy petition Friday.
Dana owes a group of noteholders $1.6 billion. The company also owes its bank lenders, led by Citicorp, $377 million and has an additional $225 million in debt secured by accounts receivable. The company also said it owes trade creditors about $550 million.
The supplier has been under scrutiny since it reported a steep third-quarter loss in January with re-stated results due to an accounting investigation. Dana, which has annual sales of about $9 billion, hired the restructuring firms Miller Buckfire & Co. and AlixPartners to help with its financial and operational issues. Dana was also being pushed by some of its vendors to make payments in advance, according to attorneys representing vendors to Dana. (See article.1)
A number of longtime auto suppliers, including Delphi Corp. and Collins & Aikman Corp., have filed for Chapter 11 bankruptcy protection during the past year. Visteon Corp., the nation's second biggest auto parts supplier, is closing three plants and putting another six up for sale under its restructuring plan.
Dana, which supplies parts to General Motors Corp., Ford Motor Co. and other automakers, employs about 46,000 workers world-wide. The filing doesn't affect the company's operations in Europe, South America, Asia, Mexico or Canada, the company said.
Dana Corp. filed for Chapter 11, making it the latest automotive supplier to seek bankruptcy-court protection.
The Toledo, Ohio, company, which makes brakes, axles and other parts, listed $7.9 billion in assets and $6.8 billion in debts. Dana said its bankruptcy filing was prompted by declining revenue associated with a downturn in the U.S. auto market along with increases in commodity and energy prices. The filing was entered in the U.S. Bankruptcy Court for the Southern District of New York.
"The general financial condition of the industry, together with Dana's inability to renew or expand its credit facilities in a timely manner, has significantly constrained Dana's liquidity," the company said in a statement.
Dana's shares plunged this week after the company failed to make bond coupon payments Wednesday worth $20.8 million. Standard & Poor's and Moody's Investors Service, the two main credit rating agencies, both downgraded their ratings of Dana on Thursday. Fitch Ratings did likewise on Friday.
The company said it has secured a $1.45 billion debtor-in-possession loan provided by Citigroup, Bank of America and J.P. Morgan Chase to fund its operations during its bankruptcy case. Dana will continue operating and said filing for Chapter 11 should provide it with access to necessary capital to implement its business plan and complete the restructuring it began before the bankruptcy filing.
"All of this will enable the debtors to maintain a strong employee and customer base and thereby preserve their position as a leader in the engineering, manufacturing and distribution of automotive, commercial vehicle and off-highway systems and components," Dana Chief Executive Michael J. Burns said in court papers filed with the bankruptcy petition Friday.
Dana owes a group of noteholders $1.6 billion. The company also owes its bank lenders, led by Citicorp, $377 million and has an additional $225 million in debt secured by accounts receivable. The company also said it owes trade creditors about $550 million.
The supplier has been under scrutiny since it reported a steep third-quarter loss in January with re-stated results due to an accounting investigation. Dana, which has annual sales of about $9 billion, hired the restructuring firms Miller Buckfire & Co. and AlixPartners to help with its financial and operational issues. Dana was also being pushed by some of its vendors to make payments in advance, according to attorneys representing vendors to Dana. (See article.1)
A number of longtime auto suppliers, including Delphi Corp. and Collins & Aikman Corp., have filed for Chapter 11 bankruptcy protection during the past year. Visteon Corp., the nation's second biggest auto parts supplier, is closing three plants and putting another six up for sale under its restructuring plan.
Dana, which supplies parts to General Motors Corp., Ford Motor Co. and other automakers, employs about 46,000 workers world-wide. The filing doesn't affect the company's operations in Europe, South America, Asia, Mexico or Canada, the company said.
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