The company, formerly part of Cooper Tire & Rubber Co. that makes body sealing, fluid handling and noise- and vibration-reduction systems, said it has obtained $175 million in debtor-in-possession financing from certain existing lenders to continue operations during bankruptcy proceedings. It made the filing in U.S. Bankruptcy Court in Delaware.
The filing includes all wholly owned U.S. and Canadian operations. Cooper-Standard Automotive Canada Ltd. will seek relief in the Ontario Superior Court of Justice in Toronto.
Cooper-Standard has been negotiating with its lenders and other stakeholders on a consensual restructuring plan and said it hopes to reach an agreement "in the near term." The company last month said it reached agreements with lenders and holders of senior notes to waive interest payments through Aug. 14.
If successful, the company would emerge from Chapter 11 protection with about $350 million in debt, down from $1.1 billion of bank and bond indebtedness. Holders of the company’s senior secured debt have also proposed an exit financing facility of $100million-$150 million, the company said in a statement.
The company, which employs about 16,000 workers worldwide, lost $55 million in the first quarter after sales dropped 47% and restructuring costs rose. It listed $88.3 million in cash or cash equivalents as of March 31.
Chairman and CEO James McElya called the action "the right decision at the right time."
"Today’s action will allow the company to maintain its leadership position in the industry, preserve its business relationships and continue providing innovative technology to our customers," he said in a statement. "We expect to emerge from Chapter11 a much stronger and more competitive company."
The move follows an announcement in March that it would reduce its salaried workforce by 20%, or650 workers, and reorganize itself into separate business divisions overseeing North American and international markets. The company said those moves allowed it to cut $47 million in annual costs.
The company also had been instituting temporary layoffs and making adjustments to its hourly workforce since late 2008.
Cooper-Standard follows a list of recent bankruptcies by major U.S. auto supplier that includes Lear Corp., Visteon Corp. and Metaldyne Corp.
The company is owned by The Cypress Group and Goldman Sachs Capital Partners Fund and was spun off from Cooper Tire & Rubber Co. in 2004. (Tire Review/Akron)
