Dana Corp. Files for Chapter 11
Dana Corp., Toledo, Ohio, announced that in order to address financial and operational challenges hampering the company's performance, Dana and 40 of its U.S. subsidiaries have filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Dana's European, South American, Asia-Pacific, Canadian, and Mexican subsidiaries are not included in the filing.
According to the company, Dana has faced a continued decline in revenues resulting from the decreasing market share and production levels of its largest domestic customers, along with sharp increases in commodity and energy prices. The general financial condition of the industry, together with Dana's inability to renew or expand its credit facilities in a timely manner, has significantly constrained Dana's liquidity. As a result, the company concluded after that its interests and the interests of its creditors, employees, customers, suppliers, and the communities in which it operates would be best served by reorganizing under Chapter 11.
To fund its continuing operations during the restructuring, Dana has secured a $1.45 billion debtor-in-possession (DIP) financing facility from Citigroup, Bank of America, N.A., and JP Morgan Chase Bank, N.A. Subject to court approval, the DIP credit facility, which replaces the company's previous $400 million revolving credit facility and $275 million receivables securitization facility, will be used for the company's normal working capital requirements, including employee wages and benefits, supplier payments, and other operating expenses during the reorganization process.
Although it was an “extremely difficult, but necessary and responsible decision” to file for Chapter 11, Michael Burns, Dana's chairman and chief executive officer, wanted to assure its customers, suppliers, and employees that Dana is open for business as usual. He added that Dana intends to proceed with its previously announced divestiture and restructuring plans, which include the sale of several non- core businesses and the closure of several facilities and shift of production to lower-cost locations. Dana also will continue to take steps to reduce costs, increase efficiency, and enhance productivity, Burns said.
Dana has filed “First-Day Motions” in the Bankruptcy Court in New York to ensure that the company's business continues to function without disruption. The court filings are intended to ensure that the company can continue to pay its employees and suppliers and maintain uninterrupted delivery of products and services to its customers. Dana's legal advisor in the Chapter 11 filing is Jones Day. The company's financial advisor is Miller Buckfire and restructuring advisor is AlixPartners.