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ATD to Recapitalize, Reduce Debt Up to $1.1 Billion

ATD announced that it has reached an agreement in principle with holders of more than 70% of its bonds on the terms of a recapitalization transaction that will reduce the company’s debt by up to $1.1 billion.

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American Tire Distributors, Inc. (ATD) announced that it has reached an agreement in principle with holders of more than 70% of its bonds on the terms of a recapitalization transaction that will reduce the company’s debt by up to $1.1 billion and provide financial flexibility as it continues its ongoing transformation.

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Representatives at ATD tell Tire Review that this is “great news,” and that it will continue to be “business as usual” as it relates to ATD customers. The agreement in principle is subject to various conditions, including finalization of definitive documentation.  Pursuant to the recapitalization, continuing manufacturer partners and trade vendors are expected to be paid in full for existing obligations in the ordinary course for goods and services provided.

“ATD has a strong foundation built on our unparalleled network, unique service offerings, and deep relationships with customers and manufacturer partners coupled with a game-changing transformation underway to evolve our business as our industry continues to change. Our journey over the past 18 months has been one of significant progress, and we are now taking steps to strengthen our financial position as we continue our transformation,” said Stuart Schuette, chief executive officer of ATD in a press release announcing the agreement. “The actions we are taking are intended to reduce our debt and create financial flexibility so we can enhance the strategic initiatives, key technologies and talent that will drive our transformation forward. The agreement we reached with our bondholders reflects their confidence in our business and paves a way for us to implement our recapitalization on an accelerated basis. We are confident in our future, and we look forward to keeping the power of choice alive and providing our customers the most connected and insightful automotive solutions in the industry.”

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Schuette added, “Our commitment to serving our customers – like no one else can – will not change as we move forward. I want to thank all of our associates for their continued dedication and tireless efforts. They are a winning team, and our unparalleled selling and supply chain organizations are pivotal in helping our customers thrive and drive into the future.”

The release also added that ATD has the liquidity to meet its business obligations, and operations are continuing as normal throughout this process.

Kirkland & Ellis LLP is serving as legal counsel to ATD, AlixPartners LLP is serving as an operational advisor and Moelis & Company LLC is serving as financial advisor.

 

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