Collins & Aikman Corporation said in a statement on Monday that the US Bankruptcy Court has given interim approval for the troubled auto parts maker to enter into an agreement with certain customers to provide $US82.5 million of temporary price increases under existing contracts, an additional $82.5 million of post-petition financing, and funding of capital requirements (of approximately $140 million).
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The agreement also provides a commitment not to resource current production or awarded programmes, establishes a framework for additional customer price negotiations and sets a timeline for presenting a comprehensive business plan.
John Boken, C&A’s chief restructuring officer, said: “This agreement is the product of constructive negotiations with our lender and [customers] that took place over the last several weeks.”
Boken added: “We are extremely pleased to receive the court’s approval of this agreement, which will enable Collins & Aikman to continue operating normally as we formulate and implement our business plan. The financing is also a sign of confidence by both our customers and JP Morgan in our ability to address the issues we are currently facing and pursue strategies to maximise the value of Collins & Aikman.”
Customers that have signed the agreement are: DaimlerChrysler, Ford, General Motors, Honda Motor, Nissan Motor and Toyota Motor. Collectively, they account for approximately 85% of the company’s North American revenue.
The financing provided by this customer agreement is supplemental to the court-authorised $150 million interim debtor-in-possession financing provided by JP Morgan and the $30 million post-petition financing previously obtained by C&A from the same customers.
Along with the company’s cash from operations, funds available under the terms of this agreement will be used for operating needs.
Colllins & Aikman company profile (purchase and download)
