TOWER Automotive has filed a commitment letter and restructuring term sheet with the US Bankruptcy Court for the Southern District of New York.
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Three significant bondholders have agreed to underwrite a $US250m equity rights offering that will form the basis of a reorganisation plan and Tower’s emergence from bankruptcy.
Funds managed by Strategic Value Partners, Wayzata Investment Partners and Stark Investments, who collectively own in excess of $225m of unsecured claims against Tower, have agreed to backstop a rights offering to eligible accredited unsecured creditors and purchase their respective pro rata shares in the rights offering, subject to the terms and conditions outlined in the commitment letter. The commitment is subject to bankruptcy court approval, as well as various conditions and deadlines.
Under the term sheet, the senior secured debt would be refinanced and paid in full and all allowed administrative and priority claims would be paid in full. Unsecured creditors as a group would be entitled to certain cash and warrants, with eligible unsecured creditors being able to participate in the rights offering.
In connection with the restructuring term sheet, Tower Automotive and the prospective investors are continuing discussions with Tower’s Debtor-in-Possession (DIP) lenders on a plan for the maturity of the current DIP facility which expires on 2 February.
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By GlobalData“This commitment letter with its significant equity investment from our bondholders represents a major step toward completing our reorganisation plan. We are proud to have been able to attract this significant capital infusion to our company and to the automotive supply industry,” said Kathleen Ligocki, president and chief executive officer of the body structures specialist.
During the bankruptcy process, Tower has closed almost half its US plants, driving significant manufacturing productivity improvements, successfully negotiating settlements with all 10 US-based labour unions and winning over $170m in new business.
“As challenging as this journey has been, the restructuring process has allowed us to accelerate improvements needed to emerge a much healthier, leaner and stronger company,” Ligocki said.
