Auto parts maker Dana Corporation has said it missed a US$21m payment for interest on two of its bonds, fanning fears that it might not be able to avoid bankruptcy, according to the Financial Times (FT).
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The paper said the company is talking with creditors to change the terms of loans and is expected to announce the outcome of those talks in the next two weeks.
The FT, citing a company statement, said Dana has a grace period until 31 March to make the payment and failure to do so would constitute a default.
The paper noted that, like the rest of the industry, Dana has suffered from lower demand from automakers, which has forced it to cut jobs and close plants last year – it reported a $1.3bn loss in its fiscal third-quarter and delayed a dividend payment.
News that Dana had hired a bankruptcy advisory services firm led two of the main credit ratings agencies to downgrade the company’s debt to junk last month, the Financial Times noted.
