Allied Holdings files for Chapter 11, obtains $230 million DIP commitment

New York, Aug. 1 - Allied Holdings, Inc. filed for protection under Chapter 11 of the U.S. Bankruptcy Code Monday in the U.S. Bankruptcy Court for the Northern District of Georgia.

The company blamed troubles in the auto industry for its move, particularly the decline in new vehicle production and the costs of wages and benefits to union employees.

The Decatur, Ga., distributor of new and used vehicles listed assets of $132.226 million and liabilities of $179.895 million in its filing.

Wells Fargo Bank as indenture trustee for $150 million of 8 5/8% senior notes due 2007 was listed as the largest unsecured creditor followed by Central States Pension Fund of Chicago with $2.468 million. All other unsecured creditors had claims under $1 million.

Allied Holdings obtained a commitment for a $230 million debtor-in-possession facility from GE Commercial Finance, Morgan Stanley Senior Funding, Inc. and Marathon Asset Management.

The DIP will be structured as a $130 million revolver subject to a borrowing base - including a $75 million letter-of-credit sub-facility - at Libor plus 300 basis points, a $20 million term loan A at Libor plus 550 basis points and an $80 million term loan B at Libor plus 950 basis points. There is a 1.75% closing fee.

Maturity of the DIP will be 18 months from closing unless Allied exits Chapter 11 earlier.

GE Capital Corp. will be administrative agent, co-agent on the revolver, and collateral agent, Morgan Stanley will be co-agent on the term loan B and Marathon Structured Finance Fund, LP will be co agent on the revolver, agent on the term loan A and co-agent on the term loan B.

Proceeds will be used for working capital, to repay $186 million of pre-bankruptcy bank debt on a facility secured by accounts receivable via Ableco Finance, LLC as collateral agent and Wells Fargo Foothill, Inc. as administrative agent. Allied has $26.7 million outstanding under a revolver that is part of this facility, $43.7 million of letters of credit and $113.6 million of term loan borrowings.

"We have made significant progress during the last few years in our efforts to restructure and streamline our operations, including measures to lower overhead expenditures, as well as reduce costs across our non-bargaining employee base," said Hugh E. Sawyer, Allied Holdings' president and chief executive officer, in a news release. "Our more efficient, focused organization has facilitated improvements in damage free deliveries, organic growth through new business with our customers, and reinforced the underlying potential of our core transportation services businesses at our operating subsidiaries.

"However, these positive developments have been significantly offset by automotive industry dynamics that continue to hamper our financial performance, including a sharp decline in new vehicle production, rising fuel costs, and increasing wage and benefit obligations under the Allied Automotive Group's master agreement with its Teamster-represented employees.

"Reorganization under Chapter 11 will provide Allied with an opportunity and the forum to address these financial challenges, and we are committed to working cooperatively throughout the process to implement a plan of recovery that serves the company, as well as the interests of its creditors, employees, customers, and suppliers.

"Our objective is to use this process to redesign our capital structure in order to lower our debt, reduce the multi-year cost increases associated with our contract with our Teamster-represented employees, address certain customer pricing issues, and take steps to improve our financial performance."

As of March, Robert J. Rutland owned 12.6% of the company's stock, Guy W. Rutland III owned 9.5%, Guy W. Rutland IV owned 7.3%, Beck, Mack & Oliver LLC owned 11.4%, Alan W. Webber owned 12.0%, J.B. Capital Partners, LP owned 11.4%, Dimensional Fund Advisors, Inc. owned 5.2% and Robert E. Robotti, Robotti & Co., LLC, Robotti & Co. Advisors, LLC, Ravenswood Management Co., LLC and Ravenswood Investment Co., LP owned 8.2%.

Allied Holdings asked for authorization to employ Miller Buckfire & Co., LLC as its financial advisers.

The Chapter 11 case number is 05-12515.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.