From The Milwaukee Journal Sentinel
NOVI, MI — Tower Automotive’s postponed payment of a dividend and failure to amend a credit agreement “has increased significantly” the risk that the company might file for bankruptcy, an investment analysts’ report has warned.
Tower, based in Novi, Mich., said Friday it was postponing payment of a $4.4 million dividend tied to a convertible bond.
It also said it had hired a new financial consultant and was developing contingency plans after a majority of its lenders objected to terms of a revised credit agreement. Tower’s factory on the north side of Milwaukee has seen significant job losses and restructurings.
Tower must renegotiate its debt because its customers, original equipment makers such as Ford Motor Co., told the supplier of structural steel components they will no longer pay in advance for its products.
The deferral of the $4.4 million preferred dividend “improves the company’s short-term liquidity position and preserves the company’s options until an amendment with its lenders is finalized or a contingency plan is in place early next year,” Tower said.
In a report after the announcement, analysts at Milwaukee-based Robert W. Baird & Co. said the decision is, “a sign that something more dire could be imminent.”
Tower spokeswoman Sharon Wenzl said, bankruptcy is not anything that’s on the table at this time. We’re simply trying to replace programs that the OEMs had on early payment.”
Tower Automotive’s stock price, which fell 6 cents Friday, closed Monday at $2, down 12 cents.
Copyright 2004 The Milwaukee Journal Sentinel. via ProQuest Information and Learning Company. All Rights Reserved.
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