Tower Automotive exits Chapter 11 bankruptcy following asset sale

By Caroline Salls

Pittsburgh, July 31 - Tower Automotive, Inc. emerged from Chapter 11 bankruptcy Tuesday when its plan of reorganization took effect, according to a filing with the U.S. Bankruptcy Court for the Southern District of New York.

The company's plan of reorganization and the $1 billion sale of substantially all of its assets to Cerberus Capital Management LLP were approved by the court on July 12.

As previously reported, treatment of creditors under the plan will include:

• Holders of other priority claims and other secured claims will receive cash payment in full from a post-consummation trust priority account;

• Holders of second-lien claims will receive cash payment in full from the second-lien collateral account and the second-lien facility will be terminated;

• Holders of R.J. Tower bondholder claims will receive their share of the R.J. Tower primary recovery, which consists of 68% of the unsecured creditors trust assets, and a secondary recovery, provided that these creditors do not receive any distribution until after all post-consummation trust senior claims have been paid in full;

• R.J. Tower general unsecured claims will receive their share of the R.J. Tower primary recovery, which consists of 32% of the unsecured creditors trust assets, and a secondary recovery, provided that these creditors do not receive any distribution until after all post-consummation trust senior claims have been paid in full;

• Holders of 5.75% convertible senior note claims will receive a share of the class 6 recovery, provided that these creditors do not receive any distribution until after all post-consummation trust senior claims have been paid in full;

• Holders of general unsecured claims will receive a share of the class 7 recovery, provided that these creditors do not receive any distribution until after all post-consummation trust senior claims have been paid in full; and

• Holders of trust related claims, inter-company claims and equity interests will receive no distribution under the plan.

In June, Tower Automotive announced a $935 million credit facility to help fund the company's acquisition by Cerberus, with JPMorgan and Goldman Sachs lead banks on the facility.

The facility consists of a $200 million five-year asset-based revolver, a $360 million first-lien domestic term loan talked at Libor plus 300 basis points, a $250 million six-year first-lien euro term loan talked at Euribor plus 300 bps, a $75 million seven-year domestic second-lien term loan talked at Libor plus 600 bps and a $50 million seven-year euro second-lien term loan talked at Euribor plus 600 bps.

Tower, a Novi, Mich.-based auto parts maker, filed for bankruptcy on Feb. 1, 2005. Its Chapter 11 case number is 05-10578.

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