J.L. French Files Reorganization Plan

April 5, 2006
Diecaster spells out new financial structure to come

April 5, 2006 -- J.L. French Automotive Castings Inc., which declared Chapter 11 bankruptcy in February, now has filed its reorganization plan and disclosure statement, outlining how it will address claims made in the Chapter 11 case.

J.L. French produces aluminum automotive diecastings, including including oil pans, engine front covers, engine blocks, and transmission cases.

The company stated it had -- as of December 31, 2005 -- approximately $465 million in first- and second-lien senior secured debt, and $28.9 million in 11.5% senior subordinated unsecured notes due 2009. It said it incurred most of this debt through its expansion and acquisition strategies in 1990s.

J.L. French states that once it is reorganized it anticipates long-term debt will be about $26 million, and it will have a new, $205-million term facility added to its balance sheet. Chairman, CEO, and president Jack F. Falcon stated: "We are on track with our reorganization, as evidenced by today's filing which has been completed in less than 60 days since we first entered Chapter 11."

"During this time," Falcon continued, "we have operated our business as we intended: We have entered into new business agreements with major customers, commenced shedding underutilized assets, and maintained our organizational leadership in its entirety. We are optimistic that we will complete the reorganization and emerge with a new, revitalized balance sheet by the end of the second quarter of this year."

The plan outlines how different creditor classes' claims will be addressed. It calls for the repayment in full of the first-lien debt (estimated at $295 million). All classes related to the payment of debtor-in-possession (DIP) financing claims, administrative expenses, priority claims and capital leases, and other secured claims, will be paid in full.

Second-lien notes claims, (estimated at $177 million), will be converted into 8%-22% of the new common stock and three tranches of warrants for new common stock in the reorganized company. The warrants will have strike prices ranging from $195 million to $295 million in equity.

Also, holders of second-lien notes claims may participate in a rights offering that will raise $110 million to $130 million in exchange for 78%-92% of the new equity. This cash will help finance the reorganized company's exit from Chapter 11.

Trade creditors will receive 100% of the face amount of their claims, but not any interest on those claims. General unsecured creditors (other than holders of senior subordinated 11.5% notes and trade creditors) will receive pro-rated shares of $50,000 or common stock having a value equal to certain property unencumbered by liens, whichever is greater.

Distributions under the plan will be made through new cash investment and exit financing of $255 million, of which $205 million will be a term loan and a revolver of $50 million, with at least $30 million unfunded capacity at reorganization.