Dana says it will proceed with asset sales, record $175 million impairment charge in the third quarter

By Jennifer Lanning Drey

Eugene, Ore., Sept. 29 - Dana Credit Corp.'s board of directors adopted a plan to proceed with the accelerated sale of substantially all of its remaining assets, according to a Friday filing with the Securities and Exchange Commission.

The company will carry out the plan regardless of whether it enters into a forbearance agreement with the ad hoc committee of holders of the majority of the outstanding principal amount on Dana Credit's notes, according to the filing.

Dana said it expects to record an approximately $175 million impairment charge in the third quarter as a result of the sale of the company's lease and other assets, which have a net book value of $375 million.

The company's remaining assets are primarily equity investments, which have a net book value of $100 million. Those assets would not be impaired if held to maturity but are expected to result in losses if sold during the next two years, according to the filing.

At currently estimated market prices, Dana expects an aggregate loss in the range of $30 million to $40 million from the sale of the equity investments, according to the filing.

The company will record the resulting impairment charges in future periods as it enters into agreements for sales of the assets.

Dana Credit and the ad hoc committee are currently negotiating a forbearance agreement that provides for Dana Credit to sell its lease and other portfolio assets over a 24 month-period and use the proceeds to make payments to the noteholders who agree to forebear.

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

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