Meridian asks for permission to pay fee to Deutsche for work on new DIP facility

New York, June 10 - Meridian Automotive Systems Inc. asked for approval to pay a $300,000 work fee to Deutsche Bank Trust Co. Americas to cover the cost of preparing a new debtor-in-possession credit facility.

In a request to the U.S. Bankruptcy Court for the District of Delaware filed Thursday, Meridian said that "understandably" Deutsche "does not wish to undertake a costly and accelerated work schedule to achieve a final financing package if it must bear all of the execution risk attendant to the deal not closing."

Specifically, Meridian cited the possibility that the court does not approve the DIP facility, given the "prospect of a contested financing hearing," or that a more favorable financing alternative is presented.

At the moment, Meridian has interim approval for a $30 million DIP facility with JPMorgan Chase Bank, NA.

However, at a final hearing on May 26 it did not go ahead with a request for approval of the full $375 million facility with JPMorgan, instead asking for - and receiving - a continuation of the interim facility until June 30.

Meridian said the decision was in response to reduced production volumes announced by some of its auto maker customers.

Following that court decision, Meridian has decided that it will no longer seek a DIP facility big enough to repay its $310 million of first lien bank debt but it instead will look for a credit line that will supplement its current liquidity, according to the court filing.

Although it did not give a size, Meridian said the amount would be "substantially less" than the original JPMorgan financing.

However the new facility is needed quickly because of the demands of working capital fluctuations and periodic liquidity tightness.

Negotiations with the agent for the current first lien facility produced terms that Meridian considered "unacceptable," hence its decision to contact other financing sources and choice of Deutsche Bank.

A hearing is set for June 16.

Meridian is a Dearborn, Mich., supplier of front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Its Chapter 11 case number is 05-11168.

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