Tower Automotive DIP interest rate increase, covenant and borrowing base changes approved

By Caroline Salls

Pittsburgh, Oct. 26 - Tower Automotive, Inc. obtained court approval of an amendment to its debtor-in-possession financing agreement that changes interest rates, amends covenants the company expects to violate in the fourth quarter and modifies the borrowing base, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Under the amendment, DIP lenders waived any technical breaches that may have occurred as a result of inadvertent noncompliance with restrictions on the payment of dividends.

The amendment also increases the interest rate and letter-of-credit fee by 25 basis points.

Tower must pay a one-time amendment fee of 0.25% of each lender's commitment.

In addition, the amendment "provides a substantial reduction in the domestic and global EBITDA covenants" under the DIP agreement.

Specifically, domestic EBITDA targets for the rolling 12 months ended Sept. 30 were reduced to $50 million from $52 million; to $30 million from $74 million for the rolling 12 months ending Oct. 31; to $30 million from $82 million for the rolling 12 months ending Nov. 30; and to $30 million from $85 million for the rolling 12 months ending Dec. 31.

Global EBITDA targets for the rolling 12 months ended Sept. 30 were reduced to $150 million from $190 million; to $140 million from $210 million for the rolling 12 months ending Oct. 31; to $140 million from $220 million for the rolling 12 months ending Nov. 30; and to $150 million from $225 million for the rolling 12 months ending Dec. 31.

Additionally, under the definition of borrowing base, Tower will have an additional $25 million of availability during the periods of each year between July 15 and Aug. 15 and Dec. 15 through Jan. 15.

For 2006 and 2007, the company will have the additional $25 million availability from Nov. 1 through Feb. 2, extending the period by 60 days.

The 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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