Hayes Lemmerz International has agreed with its secured creditors to continue a restructuring program through a Chapter 11 bankruptcy filing, which will lead to the lenders gaining “substantially all of the equity” in the reorganized company. Hayes Lemmerz says its goal is to reduce its corporate debt. A certain number of the creditors are supplying debtor-in-possession financing valued at $100 million, which will be converted to ownership stakes once the bankruptcy and reorganization are completed.
Chairman and CEO Curtis Clawson stated: "The Chapter 11 filings were precipitated by an unprecedented slowdown in industry demand and a tightening of credit markets. 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 produces aluminum and steel wheels for passenger cars and light trucks, and steel wheels for commercial trucks and trailers. It also manufactures automotive powertrain components. The voluntary bankruptcy filing includes the company plus certain of its U.S. subsidiaries, along with Hayes Lemmerz Finance LLC - Luxembourg S.C.A.
The company says its operations will continue without interruption. It reports that the DIP loan together with its available resources provide liquidity of approximately $138 million.
Clawson said: “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."
Hayes Lemmerz has been carrying out a restructuring of sorts for much of the past year. It closed an aluminum wheel plant in Gainesville, GA, in 2008, citing “global overcapacity” in the sector for light vehicle aluminum wheels, as well as a rising level of imports to North America from lower-cost production markets. It called that closing part of a strategy “to continue to focus its business on the right products in the right geographic regions.”
Hayes Lemmerz operates 24 plants worldwide, producing automotive and commercial highway wheels and powertrain components.
"We have been executing our operating plan by diversifying our global customer base, focusing on our core wheel business and expanding our operations in leading-cost regions,” Clawson now says. “We are focusing on the right customers, the right products and the right geography. We expect to emerge from Chapter 11 with a strong balance sheet and with our company better positioned to succeed as the marketplace recovers."
Hayes Lemmerz in Pre-Negotiated Bankruptcy
Wheel manufacture to continue restructuring program; creditors supply $100 million to continue operations