American Axle & Manufacturing (AAM) has said that it has reached agreement to receive as much as US$210m in funding from GM as it strives to avoid bankruptcy.
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AAM is the principal supplier of driveline components and axles to GM for its rear-wheel-drive pickup trucks and sport-utility vehicles made in North America.
GM accounts for around 75% of AAM’s revenue and GM cannot easily switch to other suppliers on the parts it takes from AAM, so the move protects an important GM supply line.
AAM said it had reached an agreement in principle for GM to pay US$110m to cover contracts cancelled due to the car maker’s bankruptcy in June.
The company also said GM will provide a loan of as much as US$100m. American Axle will have the right to make multiple draws from the loan through September 20, 2013. That part of the deal would give GM the option to take a stake in AAM.
The GM funding will give AAM more time to negotiate a deal with its lenders after it breached its loan agreements when its debt and interest payments ran too high. A waiver on those loan breaches was scheduled to expire Thursday, but the lenders have extended the deadline until the end of August.
