Dana Corp asks court to approve settlement agreement with Sypris Technologies

By Reshmi Basu

New York, July 25- Dana Corp. requested court approval for a new settlement agreement with Sypris Technologies, Inc., according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

In 2006, both companies were in dispute over supply agreements, including the pricing of gear sets. Unable to resolve the issues, they entered into arbitration under the supervision of a court appointed mediator.

After extensive arms-length negotiation, the settlement "resolves many complex, contentious, costly and long-running disputes between the debtors and Sypris," which is Dana's largest component parts supplier, the company said in the filing.

According to the motion, the deal will save Dana more than $100 million over the seven-year period that still remains on the current contract. Furthermore, Dana estimates that it will realize $16.3 million in annual savings due to price reductions of certain parts and value stream contributions.

Under the new settlement agreement

* Dana has the right to source certain production to alternative suppliers;

*Sypris has a $89.9 million unsecured claim against Dana and a $30 million non-priority claim against Dana and its affiliate Torque-Traction Manufacturing Technologies, LLC, providing that the recovery of those claims does not exceed $89.9 million; and

*There are broad mutual releases.

Pending court approval, the new agreement will expire on Dec. 31, 2014.

In addition, Dana said the creditors' committee was kept in the loop throughout the negotiation process and has also thrown its support behind the deal.

The hearing is scheduled for Aug. 7.

Dana is a Toledo, Ohio-based supplier of components, modules and systems to vehicle manufacturers and related aftermarkets. It filed for bankruptcy on March 3, 2006. Its Chapter 11 case number is 06-10354.

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