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ATD Reaches Agreement in Principle with Term Loan Lenders

American Tire Distributors, Inc. reached an agreement in principle with holders of a majority of its term loans to support its recapitalization plan.

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American Tire Distributors, Inc. reached an agreement in principle with holders of a majority of its term loans to support the previously announced restructuring support agreement, which would reduce the Company’s debt by approximately $1.1 billion and increase its financial flexibility as it continues its ongoing transformation.

The agreement results in the support of all three categories of the company’s debt holders, ATD said in a press release.

“We are pleased to have the support of our term loan lenders for our previously announced restructuring support agreement, which will help to facilitate a fully consensual court-supervised process,” said Stuart Schuette, CEO of ATD. “The strong support by our key financial stakeholders for our recapitalization plan represents an important vote of confidence in our business and our future. We intend to move quickly through this court-supervised process and continue our ongoing transformation to lead change in our industry.”

Under the terms of the agreement, which is subject to court approval and final documentation, the term loan lenders will, among other things:

  • Provide half of the $250 million in new financing to support ATD’s continuing operations.
  • Extend the maturity of the term loan facility by three years.
  • Participate in exit financing upon ATD’s completion of the court-supervised process.

The Company also announced that it has received court approval of all of its first day motions that will support the business. The approved motions give the company the authority to, among other things, enter into post-petition financing, continue to utilize its cash management system and continue to pay critical suppliers and vendors in full under pre-existing trade terms. The Company intends to meet its obligations in the ordinary course and expects its operations to continue uninterrupted throughout the court-supervised process, ATD said in the release.

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“The Court’s approvals of our first day motions are an important step forward that will allow the company to continue meeting our obligations and providing our customers the unparalleled selection and service they have come to expect from us,” Schuette said. “This positive momentum would not be possible without the commitment of our associates. On behalf of our management team, we thank them for their hard work and continued focus on enabling ATD to support our customers across all channels, and the consumers they serve.”

On Oct. 4, ATD entered into a definitive agreement with approximately 75% of its bondholders on the terms of a recapitalization that would reduce the company’s debt by approximately $1.1 billion. To implement the definitive agreement, the company voluntarily filed for reorganization under Chapter 11 in the District of Delaware. ATD’s operations across its distribution network are continuing to serve customers without disruption as it moves through this process.

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