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DURA Automotive Systems Secures $77MM Financing to Pursue Expedited Restructuring & Going Concern Sale

October 21, 2019, 08:12 AM
Filed Under: Automotive

DURA Automotive Systems, LLC, a leading global automotive supplier specializing in the design, engineering, and manufacturing of automotive mobility products, including parts and systems to support the industry’s shift to electric vehicles, announced today that it is moving forward with a restructuring process to facilitate an infusion of new capital and to pursue an expedited going-concern sale process that will fuel the future growth of the Company. To implement this restructuring, the Company and its domestic subsidiaries have filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Middle District of Tennessee. DURA’s non-U.S. subsidiaries are not part of the Chapter 11 filing.

DURA has obtained a commitment from Ark II CLO 2001-1, Ltd., an entity controlled by Lynn Tilton, DURA’s CEO and majority owner, for a $77 million debtor-in-possession financing facility, including $50 million of new money, the proceeds of which will be used to fund the Company’s ongoing business operations, including capital expenditures for future platforms. This facility will allow DURA to continue business as usual while pursuing a court-supervised, going-concern sale, commonly referred to as a “363 sale.” In connection with the 363 sale process, an entity controlled by Ms. Tilton has proposed to purchase DURA’s assets and assume all customer, trade, and employee obligations (including pension obligations), subject to higher and better bids from other potential purchasers.

The Company expects this expedited sales process, including the closing on the 363 sale, to be completed within approximately 120 days. A Transaction Committee consisting of two independent directors has been appointed to provide for a clear and quick sales process.

Through the financing commitments and acquisition proposal, DURA intends to facilitate a restructuring that will position the Company for the future by resolving its near-term liquidity needs, outstanding ownership issues and will allow the Company to capitalize on its quality manufacturing, talented workforce, and recent new business opportunities.

“The financing Ms. Tilton has agreed to supply will provide DURA with much-needed capital to fund growth programs that we have recently been awarded,” said Kevin Grady, Executive Vice President & Chief Financial Officer of DURA. “These important actions will allow us to continue our operations as normal. Most critically, this expedited sales process will not result in any supply disruptions or trade impairments.”

Lynn Tilton, CEO of DURA, said: “Ongoing constituent disputes have made it impossible for DURA to access ordinary course, yet essential financing. The actions announced today will allow the Company to move forward and access the necessary capital that will fuel its growth. I look forward to working closely with DURA’s leadership and its talented and dedicated work force throughout this process as we continue the transformation of this great company.”

The Company plans, subject to approval by the Bankruptcy Court, to pay wages and benefits to its employees in the ordinary course, including the continuation of its normal course funding of its pension obligations. DURA has filed several other customary “first day motions” with the Bankruptcy Court, including with respect to its cash management procedures, which will allow the Company to conduct business without interruption while it pursues the 363 sale on an expedited basis. The Company will pay its suppliers and other vendors in the ordinary course for parts supplied and work performed throughout the bankruptcy process.

DURA’s non-U.S. operations in Asia, Europe, South America, and Mexico are not included in the Chapter 11 cases, and their operations will continue in the ordinary course. “Our business outside the U.S. is strong and stable, and we expect no changes in our international operations,” said Mr. Grady.

DURA’s bankruptcy counsel is Kirkland & Ellis LLP. The Chapter 11 petition was filed in the United States Bankruptcy Court for the Middle District of Tennessee.

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