TOLEDO, Ohio — Dana Holding Corp. said it has received the requisite support of its lenders to amend the financial covenants for its $1.3 billion senior secured term credit facility. The amendment improves the ratios permissible for leverage and interest coverage.
This covers the company’s financial covenants for each fiscal quarter through 2012.
The financial covenants in the term credit facility are calculated and determined at the end of each quarter. Dana anticipates being in compliance with the amended covenants as of Dec. 31.
Dana also received permission to dispose of certain non-core businesses and issue additional debt outside the United States. The company said these amendments will provide Dana with greater flexibility as it considers strategic options and implements its restructuring plans.
In connection with the amendment of its term credit facility, Dana has agreed to pay an amendment fee and increase the annual base interest rate by 50 basis points per annum and will repay $150 million of outstanding principal under the term credit facility.
As of Oct. 31, the company had approximately $1 billion in unrestricted cash.
"As we reported during our recent third-quarter earnings announcement, tumultuous industry conditions and our resulting outlook for the balance of the year suggested that the renegotiation of our loan covenants was prudent," said Dana Executive Vice President and Chief Financial Officer Jim Yost. "These modifications position us to be in compliance with our key financial covenants going forward and provide the flexibility needed to achieve our strategic imperatives."
