Oxford Automotive has announced an extensive restructuring plan for both its US and European operations.
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The company said that the goal of the restructuring plan is to maximize the value of its US operations while enabling Oxford to continue to focus on its successful European operations, which have exhibited strong profitability over the last several years and have a solid book of business.
European operations, headed by Herve Guillaume, consist of stamping and assembly operations in France and Germany, and mechanisms operations in France and Turkey.
“Oxford’s European operations have performed admirably despite difficult economic times,” said David Treadwell, CEO of Oxford. “We are intent on growing that business.”
Oxford’s restructuring plan is based on discussions and an agreement-in-principle reached among Oxford, the ad hoc committee of its secured bondholders (holding over a majority of the face value of Oxford’s secured bonds) and its equity holder.
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By GlobalDataPursuant to the consensual restructuring plan, Oxford’s secured bondholders will receive the majority of the equity of a new holding company for the European entities.
In addition, in order to facilitate a ‘consensual and orderly restructuring’, the plan will also provide Oxford’s unsecured creditors with the opportunity to share in the equity of the new holding company or receive cash. No distributions will be made to the current equity holders.
The restructuring plan also contemplates the sale of some or all of Oxford’s North American assets. “Oxford is very pleased to have the support of our capital base,” said Treadwell. “This new structure will allow Oxford Europe to continue to be a strong participant in the European supplier business.”
Consistent with its restructuring plan, Oxford has closed on the sale of the McCalla, Ala. facility to Madrid-based Gestamp Corporation. The purchase price was not disclosed. Gestamp currently supplies several DaimlerChrysler commercial programmes in Europe. This is Gestamp’s first operation in the US. Gestamp will establish an executive office in Troy, Michigan to support its North American activities.
The 382,000-square-foot plant, which opened earlier this year, will supply complete underbody assemblies for the next-generation Mercedes M-class SUV, due this month, and the Grand Sports Tourer scheduled for mid-2005.
Proceeds from the sale were used to repay in full Oxford’s senior lending facility.
In addition, as a first step towards the formal implementation of its consensual restructuring plan, Oxford announced today that it has filed voluntary petitions for relief under Chapter 11 of the US Bankruptcy Code with the U.S. Bankruptcy Court in the Eastern District of Michigan. The filing includes Oxford’s 11 subsidiaries in the United States. Simultaneously with the filing of its petitions, Oxford and its filing subsidiaries also filed a Chapter 11 plan and related disclosure statement.
“The decision to file is necessary to protect Oxford’s customers, suppliers and employees in the United States,” said Treadwell. “We expect manufacturing operations to continue without interruption throughout the reorganization process, which includes the sale of some or all of our assets. We are committed to maximizing the value of Oxford for the benefit of all constituencies and protecting as many jobs as possible. We believe this comprehensive plan allows us to move in that direction.”
In furtherance of its restructuring plan and as contemplated by Oxford’s proposed Chapter 11 plan, Oxford is in negotiations relating to the sale of five of its northern U.S. plants. The potential sale relates to Oxford plants located in Corydon and Greencastle, Ind.; Lapeer and Prudenville, Mich.; and Canton, Miss. Oxford anticipates selling these plants during Oxford’s Chapter 11 cases through a 363 sale process to ensure that Oxford receives the highest and best offer for the plants.
