SHEBOYGAN, Wis. – In response to U.S. automotive production declines and industry-wide credit restrictions, aluminum automotive components manufacturer J.L. French Automotive Castings Inc. has filed for Chapter 11 bankruptcy protection. The company announced plans to reduce its secured debt from approximately $280 million to approximately $65 million via debt-for-equity swaps with first and second lien term loan lenders.

The company and its domestic affiliates will complete a pre-negotiated restructuring under Chapter 11 and today filed voluntary petitions in the U.S. Bankruptcy Court for the District of Delaware. The company intends to file its Chapter 11 Plan of Reorganization and Disclosure Statement within the week.

None of the company’s foreign operations are included in the Chapter 11 filing. The company said these businesses will remain unaffected by the filings and will continue operations as usual.

J.L. French also announced an agreement with certain first lien lenders for a $15 million debtor-in-possession (DIP) facility to fund working capital needs that may arise during the reorganization. This facility will also serve as the foundation for the company’s exit financing.

“We are very pleased to have reached sufficient agreement with our lenders and customers to offer a Plan of Reorganization and Disclosure Statement very shortly,” said Thomas Musgrave, chairman, president and chief executive officer of J.L. French. “Our company has a strong business model with distinct technological and quality advantages that position us well with our customer base. However, sales have dropped commensurate with the dramatic decline in the North American automotive production to the extent that we cannot service the existing debt structure.

“By significantly reducing our debt, we will remove the balance sheet barriers that have historically prevented us from securing awards of certain new business contracts, and will provide the company with additional operating liquidity. The new financial structure will significantly enhance customer and vendor confidence and enable J.L. French to focus its resources to consolidating its operations, research and development, new customer programs and other strategic initiatives. In fact, our major customers support the proposed Chapter 11 Plan.”

Musgrave further noted that, “We intend to complete our reorganization in a matter of months – we expect to emerge from Chapter 11 protection within 90 days. In so doing, we will contain reorganization costs and minimize any disruption to our business.”

J.L. French is filing motions immediately with the court to request permission to pay certain pre-petition claims, including employee wages and benefits, shipping fees and essential vendor claims. Under these “first day motions,” the company is proposing that the pre-petition claims of essential trade creditors be paid in full in the ordinary course of business. In addition, under the Chapter 11 Plan, the company will assume its contracts with its essential trade creditors and the customers that entered into accommodations agreements with the company.