DURA Automotive Files Chapter 11 for U.S. and Canadian Operations

DURA Automotive Systems, as well as its U.S. and Canadian subsidiaries, have filed for protection under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the District of Delaware. DURA's European and other operations outside of the U.S. and Canada, accounting for approximately 51 percent of DURA's revenue, are not part of the filing.

ROCHESTER HILLS, MI — DURA Automotive Systems, as well as its U.S. and Canadian subsidiaries, have filed for protection under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the District of Delaware. DURA’s European and other operations outside of the U.S. and Canada, accounting for approximately 51 percent of DURA’s revenue, are not part of the filing.

DURA elected to pursue a restructuring under court protection as it will facilitate both a financial restructuring and DURA’s ongoing operational restructuring, the successful implementation of which will help DURA overcome current financial and industry pressures and position the company for long-term success.

As part of the filing, DURA has arranged for approximately $300 million in Debtor-in-Possession (DIP) financing from Goldman Sachs, GE Capital and Barclays, which will be used by DURA to fund normal business operations and continue its operational restructuring program initiated in February 2006. The company has requested, and expects to receive, permission from the court to pay employee salaries, wages and benefits. DURA has also asked for authority to pay certain critical pre-petition vendor claims and will continue to pay its post-petition obligations in the ordinary course of business. DURA said the steps it is taking will help ensure continuity of supply to customers.

“With industry conditions tightening further, we concluded that our capital structure is no longer appropriate,” said Larry Denton, chairman and chief executive officer of DURA Automotive Systems. “The Chapter 11 process will enable us to work with our creditors on a plan that will reduce our debt burden and align the business to meet the challenges of tomorrow’s automotive marketplace.”

“The entire North American automotive supply industry is at an extremely difficult juncture,” continued Denton. “Pursuing a financial reorganization under court protections is the prudent course of action and positioning us for long-term sustainability. This is in the best interest of our employees, customers, vendors and other business partners.”

DURA said the accelerating deterioration of the North American automotive industry, in particular, further production cuts by the major U.S. OEMs and the escalating cost of raw materials, adversely affected DURA’s cash position prior to the filing. The DIP financing will improve DURA’s liquidity, providing the company with sufficient working capital to continue normal operations and fund its turnaround.

In February 2006, DURA initiated an operational restructuring program, focused on improving quality, lowering production costs, increasing EBITDA and rightsizing the business to account for capacity reductions. The operational restructuring program is generating improvements today and will continue to generate additional improvements throughout the bankruptcy process.

“Once our operational and financial programs are complete, we believe that DURA will have improved its competitive position in the automotive supply market, combining best-in-class quality with best-in-cost production through our global lean-manufacturing footprint,” said Denton. “DURA plans to continue to serve customers with innovative, competitively priced products that meet the highest standards of quality today and into the future.”

For more information about DURA, go to: http://www.DURAauto.com.