NOVI, MI — Tower Automotive and some of its subsidiaries have filed a petition with the U.S. Bankruptcy Court for the Southern District of New York to reorganize under Chapter 11 of the U.S. Bankruptcy Code.
Tower said that while it benefited from recent short-term initiatives to improve liquidity, the company faced a number of recent setbacks that required it to evaluate long-term solutions. The company said a reorganization filing will allow it to address these issues while continuing normal business operations.
Kathleen Ligocki, president and CEO of Tower Automotive, said like many companies in the automotive sector, Tower has been affected by lower production volumes on key auto maker platforms and increased steel prices.
“Additionally, the recent termination of early pay programs at certain auto makers has adversely affected our liquidity,” she added. “These factors, combined with a complex and restrictive capital structure and an unsustainable debt load have made it clear that a financial reorganization was necessary to resolve these issues. By reducing our debt to more manageable levels and simplifying our capital structure, we will be better able to respond to changes in the market place, satisfy the needs of our customers and help ensure our long-term viability.”
In conjunction with its filing, the company has arranged commitments for up to $725 million in debtor-in-possession (“DIP”) financing from JPMorgan, subject to Court approval. Tower will pay post-petition vendors in the normal course of business, and has requested and expects to receive permission from the Court to continue to pay employee salaries, wages and benefits as usual.
“The financing, combined with our normal cash flow, should be more than adequate to enable Tower to continue normal business operations throughout this process,” said Ligocki.
Tower’s international operations in Europe, Asia, Brazil and Canada are not included in the Chapter 11 reorganization, and their operations continue as normal.
“Our business outside of the U.S. is strong and profitable, and we expect no change in our international operations,” said Ligocki.
Tower has retained Kirkland &Ellis LLP as its restructuring counsel. Rothschild Inc. is serving as Tower’s investment banker, and FTI Consulting is serving as Tower’s financial advisor.
For more information about Tower, visit: www.towerautomotive.com.
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