The U.S. Bankruptcy Court has confirmed the Plan of Reorganization for aluminum automotive components manufacturer J.L. French Automotive Castings Inc., which entered Chapter 11 on July 13, 2009.
"We met our commitment to complete the reorganization in record time and were able to gain confirmation of our plan in 53 days," stated Thomas Musgrave, chairman, president, and chief executive officer of J.L. French. "I want to thank everyone associated with our company, including our employees, new shareholders, lien holders, customers and suppliers for the unfailing support that enabled us to achieve a successful reorganization so quickly. The support we have received from all of our stakeholders is a testament to J.L. French’s reputation in the automotive industry as a premier aluminum die caster.
"With the reorganization behind us,” Musgrave continued, “we can now turn our entire attention to our customers, who have been extremely supportive through this process, and to continue our pursuit of making J.L. French a world-class die caster.”
The plan approved successfully reduces the company’s secured debt from approximately $280 million to approximately $50 million via debt-for-equity swaps with first and second lien term loan lenders.
“With the balance sheet now immensely strengthened, we will also be able to pursue new business opportunities that were unavailable to us before,” according to Musgrave.
Under the plan, the company’s pre-bankruptcy first lien lenders will receive 95 percent of the common stock in the newly reorganized company with the remaining 5 percent going to second lien term loan lenders. Holders of second lien term loan debt will also receive warrants for up to 15 percent of the common stock in the new company, structured in three tranches, each with five-year terms, exercisable according to individual enterprise valuations of $160 million, $180 million and $275 million, respectively.
General unsecured creditors, who voted overwhelmingly in favor of the plan, will receive pro rata shares of a $120,000 pool. Two additional settlements, including a $1 million payout for Morgan Stanley’s interest rate swap claims, will occur, as well.
Founded in 1968, J.L. French Automotive Castings, based in Sheboygan, Wis., is a leading global designer and manufacturer of highly engineered aluminum die-cast automotive parts including oil pans, engine front covers, engine blocks and transmission cases. The company employs more than 800 people in its U.S. operations.
