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Auto Parts Maker Accuride Files for Bankruptcy

Oct. 9, 2009
Balance sheet restructuring aims for financial flexibility
Accuride Corp. has filed for Chapter 11 bankruptcy protection, following an agreement with certain noteholders and senior lenders concerning a “balance-sheet restructuring.” The company indicated it has secured $50 million in debtor-in-possession financing, and will continue to conduct business as usual. Chairman Bill Lasky explained that the goal of the debt restructuring is “to create a sustainable capital structure that will support greater profitability and solidify the company’s position as the market leader in its product categories.” Lasky, who also is president and CEO of Accuride, said the group expects to emerge quickly from Chapter 11, having improved its financial flexibility and positioned itself for growth. Accuride is the parent company of Wisconsin’s Brillion Iron Works foundry and a manufacturer of commercial vehicle wheels, wheel-end components and assemblies, truck body and chassis parts, seating assemblies and other commercial vehicle components. Its products are supplied under various brands, including Accuride, Gunite, Imperial, Bostrom, Fabco, and Brillion Iron Works. The bankruptcy petition lists corporate assets totaling $682.3 million and liabilities totaling $847 million. Accuride subsidiaries in Canada and Mexico are not included in the filing. According to its proposed debt restructuring, Accuride will amend its existing credit agreement to modify certain financial covenants and extend its maturity through June 30, 2013. A series of 8.5% senior subordinated notes will be cancelled, and the noteholders will receive 98% of the common stock of the reorganized Accuride. Once the reorganization is in effect, the new Accuride will complete a $140-million rights offering of new senior unsecured convertible notes to the current noteholders. A portion of the proceeds from that offering will be used to repay the “last-out” term loan currently held by an affiliate of Sun Capital Partners, with the remainder to provide on-going liquidity for Accuride’s business. Unsecured trade creditors will be unimpaired and their claims will be paid in full. Current stockholders will receive 2% percent of the common stock of the reorganized Accuride and two-year warrants exercisable for 15% percent of the common stock of the reorganized Accuride.