Oxford to Skip Bond Payment, Cut Workers

Auto supplier Oxford Automotive Inc., beset by heavy debt, struggling North American plants and rising steel prices, is six months behind on reporting its finances to the SEC. The company plans to lay off nearly 200 people in Michigan and has been unsuccessfully shopping itself around for sale for several months, say automaker officials and supplier experts familiar with the company.

From Detroit Free Press

TROY, MI — Auto supplier Oxford Automotive Inc., beset by heavy debt, struggling North American plants and rising steel prices, is six months behind on reporting its finances to the SEC.

The company plans to lay off nearly 200 people in Michigan and has been unsuccessfully shopping itself around for sale for several months, say automaker officials and supplier experts familiar with the company.

Oxford announced late Tuesday it will miss an Oct. 15 bond payment. It also announced it has reached an agreement with its lenders to refinance its debt and free up about $50 million for current operations.

A company release acknowledged “short-term liquidity issues,” which analysts said means the company is straining to pay its bills.

The problems at Oxford, one of Michigan’s largest privately held firms, have prompted its automaker customers General Motors Corp. and Ford Motor Co. to bring in turnaround firms to oversee the company’s operations. The turnaround firms, BBK and Stout Risius Ross, are typically brought in by automakers when they feel a supplier has a shaky future.

The extent of Oxford’s financial problems have surfaced recently. Its Canadian operations recently filed for bankruptcy and the Troy, Mich.-based supplier has told the state of Michigan it plans to lay off about 180 people from its parts plant in Alma.

The company has also skipped filing its earnings reports for the past two quarters with the SEC, which prompted Standard & Poor’s to take the unusual act of ceasing coverage of the company.

Oxford, which has annual sales around $1 billion and employs about 6,600 worldwide, makes metal parts such as doors, hoods and underbodies.

A creditor to Oxford told the Free Press that some vendors are demanding the company pay its bills in 10 days, which is a very short period in auto circles, because they are concerned the supplier might file for bankruptcy protection soon.

Oxford has been in bankruptcy before, filing for Chapter 11 protection in January 2002. It emerged from bankruptcy in July 2002, but automaker officials and supplier experts said it continues to struggle to find new projects and launches.

“They have been burdened financially by their new programs. They’ve had some not good launches, have a lot of debt and about four of their plants have been struggling in North America,” said Craig Fitzgerald, a Plante & Moran partner who does strategy consulting to auto suppliers.

Oxford spokeswoman Maria Leonhauser Rosenau acknowledged the company was having some struggles but said it would soon announce a new financial plan.

“Oxford is working diligently on the financial structures of the company and will have information in the very near future,” she said.

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