NEW HAVEN, Conn. — Proliance International has reported net sales of $61 million and a net loss of $14.4 million, equal to 92 cents per share, for the first quarter ended March 31. This compares to net sales of $76.5 million and a net loss of $6.2 million, equal to 40 cents per share, in the year ago quarter.

Underlying the company’s performance, and as previously reported, the company said the lack of adequate financing in 2008 and the first quarter of 2009 resulted in significantly lower sales of domestic automotive and light truck heat exchange products that the company purchases overseas. The company believes that the lack of sufficient financing reduced total net sales by more than 20 percent in the first quarter. In addition, first quarter 2009 results were also negatively affected by a number of additional factors, including lower than expected sales volume in the company’s domestic automotive and light truck air conditioning business, necessitating a $0.8 million increase in reserves for excess inventory; a $1.5 million write-off of a receivable from a customer which is in the process of liquidation; restructuring costs of $0.8 million related to the reduction of personnel and infrastructure expenses in the U.S. and Mexico; and a $1.9 million write-off of previously capitalized financing costs no longer related to the refinancing process. The company also noted that additional restructuring actions to improve future performance are expected in subsequent quarters.

While Proliance has been unable to purchase sufficient product to meet strong demand, fill rates on many products manufactured by the company have continued to be satisfactory. A recent amendment to Proliance’s loan agreement with its senior lender, to temporarily remove remaining revolving loan blocks, is increasing the availability of funds by a limited amount, which should help to improve near-term fill rates. However, the prompt refinancing of the company’s senior debt to provide greater liquidity is becoming increasingly critical for the successful operation of the business.

While international sales and profitability were slightly lower than the year ago period, first quarter 2009 results also reflected the negative effect of currency translation due to a stronger US dollar versus the Euro and the Mexican peso, and general softness related to the worldwide recession, offset in part by continued strength in the marine business in Europe.

The company has, with the assistance of investment banking firms, run and continues to run, an extensive process to identify and consider all available options in an attempt to refinance its current credit agreement with the objective of providing Proliance with adequate liquidity to continue to operate its business. As a result, Proliance has received a number of indications of interest, including some refinancing proposals described in the company’s prior communications. However, the refinancing proposals described in previous communications have not proven to be viable under today’s difficult financing conditions and all the current remaining offers contemplate a going concern sale of Proliance as part of a bankruptcy filing by the company. While the company would prefer a transaction outside of bankruptcy and continues to explore all other available options, it may have no other choice but to select one of these offers to preserve the business, enable it to continue to properly serve customers, improve fill rates and maximize enterprise value.

For reference, in February 2008, tornadoes destroyed most of the company’s heat exchange product inventory and distribution facility in Southaven, Miss. Proliance’s lead lender required the company to apply a significant portion of the insurance proceeds to pay down debt under its senior indebtedness, thereby significantly reducing the company’s liquidity and making it difficult for Proliance to finance the acquisition of product to meet sales demand. The company promptly initiated an effort to refinance its debt and raise additional capital. However, the process has been hampered by the continued tight and chaotic credit and financial markets and other factors. The challenges faced by the company are discussed in greater detail in the company’s Form 10-K for the year ended Dec. 31, 2008 and other SEC filings.