Steel and alloy wheel supplier Hayes Lemmerz International has filed for Chapter 11 bankruptcy protection after agreeing a pre-negotiated restructure with its lenders.
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Lenders holding a majority of its secured debt agreed to restructure the company’s debt and some are providing debtor-in-possession (DIP) loans of up to US$100m, Hayes Lemmerz said in a statement.
The supplier and some US subsidiaries filed voluntary petitions under Chapter 11 of the US bankruptcy code in the Delaware bankruptcy court. The filings included Hayes Lemmerz Finance LLC – Luxembourg SCA, a borrower under the company’s secured credit facility and issuer of its senior notes.
The filing showed Hayes had total assets of $1.34bn and total debt of $1.41bn, Reuters reported.
“As a result of the restructuring, the company expects to eliminate a significant portion of its existing debt,” the firm’s statement said. “Upon confirmation of a plan of reorganisation, it is anticipated that the DIP lenders will convert certain of their loans into equity and will own substantially all of the equity of the reorganised company.”
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By GlobalData“The Chapter 11 filings were precipitated by an unprecedented slowdown in industry demand and a tightening of credit markets,” said chairman and CEO Curtis Clawson in the statement.
“These filings will allow us to reduce our debt and restructure our balance sheet. We fully expect to emerge from Chapter 11 as a stronger, more competitive company than we are today.”
Hayes Lemmerz disclosed that the Chapter 11 filings were made after it agreed a “pre-negotiated” restructuring plan with the support of “a majority of the company’s secured lenders” and consequently hope to complete the restructuring process “on an accelerated basis”.
“Operations are continuing as usual with no interruption in supply to customers. Liquidity for ongoing operations will be provided by the DIP financing,” it said.
“We fully expect our day-to-day operations will continue uninterrupted. I want to personally assure our customers, suppliers and employees that we will continue to focus on being a premier automotive supplier by satisfying customers, being a low-cost producer and having the best people,” Clawson added.
Hayes Lemmerz said it had filed a variety of first day motions, including a motion seeking approval of the DIP loan, that, with court approval, would allow it to continue to conduct business without interruption. These motions were intended to minimise any impact on customers, suppliers and employees. During the reorganisation process, suppliers would be paid as normal for goods and services purchased post-petition.
The bankruptcy filing came only a few days after the Nasdaq stock exchange told Hayes Lemmerz it no longer met listing requirements as it had not filed its annual report on time.
