Bankruptcy

Dura Drives Out of Chapter 11

Its exit financing totals $244 million, and the company's debt is slashed from $1.3 billion to $180 million.
Stephen TaubJune 27, 2008

Dura Automotive Systems, under Chapter 11 bankruptcy protection since October 2006, has finally emerged. Its exit-financing package includes a $110 million revolving credit facility, a $50 million European first lien term loan, and an $84 million U.S. second lien term loan. In addition, Dura has entered into various European accounts-receivable factoring facilities totaling approximately 65 million euros.

The exit-financing facilities, together with cash from Dura’s balance sheet, will be used in part to finance distributions under the reorganization plan, providing cash to holders of debtor-in-possession facility claims, administrative expense claims, priority claims, and Canadian general unsecured claims. Other creditors will receive new equity in the reorganized company to satisfy claims.

Effective Friday, existing Dura stock has been cancelled and will no longer have value, which is typical of bankruptcy reorganizations.

“This transaction has significantly strengthened Dura’s capital structure by reducing total net debt from over $1.3 billion to approximately $180 million, which will significantly reduce the company’s interest expense,” says Nick Preda, Dura’s CFO. Adds chairman and CEO Larry Denton: “With a strengthened balance sheet and an improved operational footprint, Dura is well positioned in the global automotive-supplier market.”

Dura has also named a new seven-member board of directors.

Case Study: How Edgewood Tahoe’s CFO Saved 500 Jobs From the Ashes