Tower Automotive defers dividend on trust convertible preferreds

By Jeff Pines

Washington, Dec. 3 - Tower Automotive Inc. said it is deferring the Dec. 31 dividend of about $4.4 million on its 6¾% trust convertible preferred securities.

Under the terms of the preferreds, the dividends can be deferred for up to 20 straight quarters.

Tower said the action "improves the company's short-term liquidity position and preserves the company's options until either the amendment approval is achieved or the contingency plan is in place early next year."

The company is currently seeking an amendment from its current bank lenders to allow it to obtain an accounts receivable securitization facility.

The company tried to submit an amendment for an accounts receivables facility before, but withdrew it after more than half of the second-lien lenders opposed the amendment as written.

To overcome its lenders' opposition, the company has been negotiating an amendment with them. Tower said it expects to make a presentation to its lenders on the proposed amendment in the near future.

As a contingency plan, the company is also considering a smaller accounts receivable securitization program, a European factoring program and other steps to improve its short-term liquidity.

The Novi, Mich.-based designer and producer of vehicle structural components for the auto industry decided to try to obtain an accounts receivable facility in response to the termination of auto makers' early payment programs.

Rothschild Inc. is advising Tower on the credit facility negotiations.

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