Cooper-Standard files bankruptcy, in restructuring plan talks

By Caroline Salls

Pittsburgh, Aug. 3 - Cooper-Standard Automotive Inc. parent Cooper-Standard Holdings Inc. and its U.S. subsidiaries filed Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the District of Delaware to complete a balance sheet restructuring, according to a company news release.

The company said its Canadian subsidiary, Cooper-Standard Automotive Canada Ltd., will seek relief under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice.

According to the release, the company has been in negotiations with its lenders and other constituents regarding a consensual restructuring plan.

Cooper-Standard said significant progress has been made in these negotiations, and it hopes to reach an agreement soon.

Under the most recent proposal supported by holders of a majority of the company's senior secured debt, Cooper-Standard's balance sheet would be significantly deleveraged, as the company would reduce its $1.1 billion of bank and bond debt to roughly $350 million.

In addition, the lenders' proposal calls for a $100 million to $150 million exit facility.

"Restructuring the company's balance sheet to align with the new automotive marketplace is the right decision at the right time," chairman and chief executive officer James S McElya said in the release.

"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."

DIP financing

In connection with the bankruptcy filing, some of Cooper-Standard's existing lenders have agreed to provide up to $200 million in debtor-in-possession financing.

The facility includes an initial $175 million superpriority delayed-draw term loan and a $25 million incremental standby uncommitted single-draw term loan.

Deutsche Bank Trust Co. Americas is the DIP facility agent.

The facility will mature on the earliest of nine months from entry of the interim order, upon confirmation of a plan of reorganization or liquidation and 30 days after entry of the interim order if the final order has not been entered.

Interest will be Base rate plus 900 basis points with a 4% floor for Base rate loans and Eurodollar plus 1,000 bps with a 3% floor for Eurodollar rate loans.

The company said it will use the financing, 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 said its proposed balance sheet restructuring follows an operational restructuring implemented in March, which has allowed it to realize $47 million in annual savings.

Debt details

According to court documents, Cooper-Standard had $1.733 billion in total assets and $1.785 billion in total debt at March 31.

The company's largest unsecured creditors include indenture trustee Wilmington Trust Co. of Wilmington, Del., with a $313.35 million claim for the company's 8 3/8% senior subordinated notes due Dec. 15, 2014 and a $200 million claim for the company's 7% senior notes due Dec. 15, 2012, as well as the state of Ohio Environmental Protection Agency, with a clean-up consent order claim.

Cooper-Standard's lead restructuring advisers are Fried Frank Harris Shriver & Jacobson LLP, Lazard Freres & Co. and Alvarez & Marsal.

Cooper-Standard is a Novi, Mich., manufacturer and marketer of systems and components for the global automotive industry.

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