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January 31, 2008 |
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DURA AUTO: Seeks Court Consent for US$170MM Replacement Loan DURA Automotive Systems, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware's permission to obtain US$170 million replacement financing and amend their US$300 million existing postpetition financing facility. The Debtors have obtained commitments from Ableco Finance LLC on Jan. 21, 2008, for a Replacement Term Loan DIP Facility, which would (i) extend the maturity date of DIP loans by six months to July 31, 2007, and (ii) would allow the Debtors to enter into a replacement facility in order borrow US$170 million to pay off US$104.5 million due under the existing term loan facility, and pay outstanding balance under its DIP revolver and pay fees and expenses associated with the replacement term loan facility. Immediately after seeking for Chapter 11 protection, and in order to fund their operations while in bankruptcy, the Debtors obtained Court permission to enter into with Goldman Sachs Capital Partners L.P., General Electric Capital Corporation, and other lender parties: -- up to US$130 million asset based revolving credit facility, subject to borrowing base and availability terms, with a US$5 million sublimit for letters of credit; and -- up to US$170 million Fixed Asset Facilities consisting of: * up to US$150 million tranche B term loan; and * up to US$20 million pre-funded synthetic letter of credit facility. Due to their failure to obtain confirmation of their Joint Plan of Reorganization by their mid-December 2007 target, the Debtors had obtained an extension of their Existing DIP Facilities until Jan. 31, 2008. The Debtors missed their target mainly because of its failure to obtain full syndication of its US$425 million exit financing, due to tighter credit conditions. Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, relates that the Debtors have been working with a number of potential replacement DIP lenders to solicit proposals for potential replacement DIP facilities. These efforts culminated in the Debtors obtaining a commitment letter from Ableco Finance on Jan. 21, 2008 for the Replacement Term Loan DIP Facility. The parties are negotiating and finalizing a form of the Replacement Term Loan DIP Facility based on the existing Term Loan DIP Facility, i.e., premised substantially on "stepping into the shoes" of the lenders under the existing Term Loan DIP Facility, along with the pledge of 100% of the stock of the Debtors' foreign non-debtor subsidiaries, an increase from the existing pledge of 66% under the existing Term Loan DIP Facility. The material terms of the Revolver DIP Amendments are: Term Description ---- ----------- Aggregate Commitments Reduced to US$90 million. New Maturity Date July 31, 2008. Interest Rate Subject to pending negotiations. New Collateral Enhanced Foreign Stock Pledge. Other Terms Certain additional terms, including Revolver DIP Facility covenants, are being negotiated and finalized. Carve-out Subject to pending negotiations. The salient terms of the Replacement Term Loan DIP Facility are: Term Description ---- ----------- Fees US$1,275,000 commitment fee, US$1,275,000 closing fee, and reasonable out-of-pocket fees and expenses incurred by Ableco, including already-paid US$175,000 advance expense deposit. Interest Rate The Term Loan will bear interest at the rate per annum equal to (i) the Reference Rate plus 7% of which 3% will be pai in- kind or (ii) the 30-, 60- or 90-day LIBOR plus 10% of which 3% will be paid-in-kind. Interest will be payable monthly in arrears. "Reference Rate" means the rate of interest publicly announced from time to time by JPMorgan Chase in New York, New York as its reference rate, base rate or prime rate, provided that at no time will the Reference Rate be less than 6.75% "LIBOR" means the London Interbank Rate, provided that at no time will the LIBOR rate referred to above be less than 3.75%. All interest and fees will be computed on the basis of a year of 360 days for the actual days elapsed. If any Event of Default occurs and is continuing, interest will accrue at a rate per annum equal to 2% above the rate previously applicable to the obligation, payable on demand. Total Facility US$170 million -- approximately US$105 million to replace existing Term Loan DIP Facility, approximately US$45 million additional term loan financing for paying down the Revolver DIP Facility, and US$20 million synthetic letter of credit facility. Interim Facility Same as total facility. New Maturity Date July 31, 2008 Use of Proceeds To (i) repay the Debtors' existing debtor-in-possession term loan of approximately US$104.5 million and replace the existing debtor-in- possession synthetic letter of credit facility; (ii) fund general corporate needs, including working capital needs; and (iii) pay fees and expenses related to this transaction and the Chapter 11 cases. New Collateral Enhanced Foreign Stock Pledge. Covenants Customary covenants. Events of Default Customary events of default. Curve-out Subject to pending negotiations. Mr. DeFranceschi relates that the credit market conditions in which the Debtors are seeking to extend and amend postpetition secured financing facilities have deteriorated markedly since November 2006, when the Court entered the Final DIP Order. As a result, the cost of obtaining DIP financing has increased substantially, he avers. Mr. DeFranceschi adds that the Debtors will suffer immediate and irreparable harm if the Court does not authorize them to enter into the Replacement Term Loan DIP Facility on an interim basis prior to the Jan. 31, 2008, maturity date of the existing DIP Term Loan Facility. On Jan. 31, the Debtors' obligations under the existing DIP Term Loan Facility would become immediately due and payable, and the existing DIP Term Loan lenders would be entitled to exercise all remedies available to them under the Final DIP Order. About DURA Automotive Rochester Hills, Mich.-based DURA Automotive Systems Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/ -- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The company has three locations in Asia -- China, Japan and Korea. It has locations in Europe and Latin-America, particularly in Mexico, Germany and the United Kingdom. The Debtors filed for chapter 11 petition on Oct. 30, 2006 (Bankr. D. Del. Case No. 06-11202). Richard M. Cieri, Esq., Marc Kieselstein, Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., of Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Mark D. Collins, Esq., Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., of Richards Layton & Finger, P.A. Attorneys are the Debtors' co- counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for the Debtors. As of July 2, 2006, the Debtor had US$1,993,178,000 in total assets and US$1,730,758,000 in total liabilities. (Dura Automotive Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). |
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