Cooper-Standard Holdings Inc., the parent company of Cooper-Standard Automotive Inc., announced August 3 that the company and its U.S. subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in order to facilitate a balance sheet restructuring. The petitions were filed in the U.S. Bankruptcy Court in the District of Delaware. The company's Canadian subsidiary, Cooper-Standard Automotive Canada Limited, will seek relief under the companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Toronto, Ontario, Canada.
Certain of the company's current lenders have agreed to provide the Company with up to $175 million in debtor-in-possession (DIP) financing. The DIP financing is subject to approval of the U.S. and Canadian bankruptcy courts. The company will use the funds, along with its current cash balance and future cash flow, to formulate and implement a restructuring plan and pay normal operating expenses, including employee wages and payments to suppliers.
The company intends to continue operating "business as usual" during the reorganization process and anticipates no interruption in its supply to customers. The filings include all wholly-owned U.S. and Canada operations. The company's joint venture entities in the U.S. and around the world are not included in the filing. Cooper-Standard's other foreign subsidiaries are not included in the filing and will not be impacted.
The company has been engaged in negotiations with its lenders and other constituents regarding a consensual restructuring plan. Significant progress has been made in these negotiations and the company is hopeful that it will reach agreement with its lenders and other constituents and be able to implement an agreement in the near term. Under the most recent proposal supported by holders of a majority of the Company's senior secured debt, the company's balance sheet would be significantly deleveraged, as the company would reduce its approximately $1.1 billion of bank and bond indebtedness to approximately $350 million. In addition, the lenders' proposal contemplates an exit financing facility of $100 million to $150 million.
"Restructuring the company's balance sheet to align with the new automotive marketplace is the right decision at the right time," said James S McElya, chairman and CEO of Cooper-Standard. "Today's action will allow the company to maintain its leadership position in the industry, preserve its business relationships and continue providing innovative technology to our customers. We expect to emerge from Chapter 11 a much stronger and more competitive company."
Cooper-Standard filed a variety of customary first-day motions with the U.S. Bankruptcy Court in Delaware to enable it to continue business as usual during the restructuring, including requests to continue paying employee wages and benefits as usual.
The balance sheet restructuring follows an operational restructuring implemented in March 2009 that has enabled the company to realize $47 million in annual savings.
About Cooper-Standard Automotive
Cooper-Standard Automotive Inc., headquartered in Novi, Mich., is a leading global automotive supplier specializing in the manufacture and marketing of systems and components for the automotive industry. Products include body sealing systems, fluid handling systems and NVH control systems, which are represented within the company's two operating divisions: North America and International. Cooper-Standard Automotive employs approximately 16,000 people globally with more than 70 facilities throughout the world.