USA: Tower Automotive files for Chapter 11 bankruptcy protection
Tower Automotive Inc. has confirmed the company and some of its units will reorganise under US Chapter 11 bankruptcy protection rules.
According to Dow Jones, the Wall Street Journal reported Wednesday the truck frame supplier planned to seek bankruptcy court protection because of turbulence in the US vehicle industry.
In a press release Wednesday, Tower Automotive reportedly said its businesses will operate normally as the company addresses liquidity needs and facilitates a debt restructuring. The company didn't make an interest payment due on Tuesday on its 9.25% RJ Tower Corp. senior euro notes, the news agency added.
Tower Automotive President and Chief Executive Kathleen Ligocki said in a statement cited by Dow Jones: "Like many companies in the automotive sector, Tower has been affected by lower production volumes on key auto maker platforms and increased steel prices. Additionally, the recent termination of early pay programmes at certain auto makers has adversely affected our liquidity."
She reportedly added these factors, combined with a complex and restrictive capital structure and an unsustainable debt load have made it clear that a financial reorganisation was necessary to resolve these issues.
Tower Automotive's European, Asian, Brazilian and Canadian operations aren't included in the Chapter 11 reorganisation, Dow Jones noted.
The report said the company has obtained commitments for up to $US725 million in debtor-in-possession financing from JPMorgan Chase & Co. (JPM), subject to court approval - Tower expects the financing and its normal cash flow to be more than adequate to allow normal operations throughout the reorganisation process.
Dow Jones added that Tower filed a petition with the US Bankruptcy Court for the Southern District of New York and plans to pay post-petition vendors in the normal course of business, and has requested and expects to receive court permission to pay employee salaries, wages and benefits as usual.