Remy Reaches Agreement on Terms of Consensual Restructuring with Noteholders |
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By: Remy International, Inc. Posted: 2007-06-16 10:52:20 |
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Remy International Inc., today announced that it has reached agreement with holders of approximately 83% of its 8 5-8% Senior Notes, 84% of its 9 3-8% Senior Subordinated Notes, and 75% of its 11% Senior Subordinated Notes on the terms of a consensual financial restructuring that would reduce the Company's debt obligations by approximately $360 million. The Company and the consenting noteholders have entered into a Plan Support Agreement pursuant to which the noteholders have agreed to consummate the restructuring through a prepackaged plan of reorganization.
"We have reached a major milestone toward achieving our goal of substantially reducing our debt burden. Once our financial restructuring is completed, Remy's capital structure will provide a foundation for sustainable profitability and better position the Company to meet the challenges of our industry head on," said President and Chief Executive Officer John Weber. A key feature of the prepackaged plan is that all trade creditors, suppliers, customers and employees will receive amounts owed to them in the ordinary course of business. The Company intends to begin soliciting votes on the prepackaged plan from holders of its unsecured notes promptly following conclusion of key customer negotiations. Following the solicitation period, the Company expects to commence a prepackaged Chapter 11 proceeding in order to implement the plan. The proceeding is expected to last between 45 and 60 days. "This ensures trade creditors, suppliers, customers and employees see no difference in Remy's operations while we complete our recapitalization. The reorganization plan will provide for uninterrupted payment of our existing and future obligations to these constituents and provide for seamless continuation of our operations," Mr. Weber commented. In conjunction with the anticipated prepackaged restructuring, Remy is in the process of obtaining both debtor-in-possession (DIP) financing and an approximately $330 million senior secured exit credit facility, the latter to become effective upon consummation of the prepackaged plan. The Company anticipates that the exit financing will consist of a term loan of approximately $205 million, with the remainder as a $125 million revolving credit facility. The Company is making substantial progress in renegotiating certain key commercial agreements to improve margins, its other stated objective with respect to strengthening the Company. "In addition to consensually improving the capital structure, I am very pleased by the cooperative nature of discussions with certain customers. The spirit of cooperation exhibited by both our noteholders and key customers are essential for Remy to continue as a strong industry player," said Mr. Weber. The significant elements of the prepackaged plan include: - Repaying the Second Priority Senior Secured Floating Rate Notes in full. - Raising $75 million in preferred equity through a rights offering to be made to holders of the Company's Senior Notes and Senior Subordinated Notes. - Exchanging the Company's existing 8 5-8% Senior Notes for $100 million of new third-lien Pay-in-Kind (PIK) Notes and approximately $50 million in cash. - Converting the 9 3-8% Senior Subordinated Notes and 11% Senior Subordinated Notes into 100% of the common equity of the reorganized company. - Cancelling all of the Company's existing equity interests. "Today's very positive announcement is the result of extensive negotiations with our stakeholders and hard work with key customers, and we believe that it provides the highest value and best outcome for all of Remy's constituents," said Mr. Weber. In light of the agreement, Remy elected to not make the June 15 interest payment in respect of the 8 5-8% Senior Notes. Remy International headquartered in Anderson, Indiana, is a leading manufacturer, remanufacturer and distributor of Delco Remy brand heavy-duty systems and Remy brand starters and alternators, locomotive products and hybrid power technology. The Company also provides a worldwide components core-exchange service for automobiles, light trucks, medium and heavy-duty trucks and other heavy-duty, off-road and industrial applications. Caution Regarding Forward-Looking Statements: This press announcement contains statements relating to future results of the Company that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 (the "Act") or by the Securities and Exchange Commission ("SEC") in its rules, regulations and releases. The Company desires to take advantage of the "safe harbor" provisions in the Act for forward-looking statements made in this press announcement. Any statements set forth in this press announcement with regard to its expectations as to financial results and other aspects of its business may constitute forward- looking statements. These statements relate to the Company's future plans, objectives, expectations and intentions and may be identified by words like "believe," "expect," "may," "will," "should," "seek," or "anticipate," and similar expressions. The Company cautions readers that any such forward- looking statements are based on assumptions that the Company believes are reasonable, but are subject to a wide range of risks including, but not limited to, risks associated with the satisfaction of the conditions precedent to the Plan Support Agreement including but not limited to the Company securing both DIP and exit financing and the occurrence of a termination event thereunder, the effect of a default under the indentures governing the Notes, future financial results and liquidity including the Company's continued ability to finance its operations in the normal course during the solicitation of votes on the Company's prepackaged plan and to make required interest payments, the continuation of forbearance agreements with respect to certain defaults and payments and the potential necessity for additional forbearance agreements, the possibility that the Company may need to commence a chapter 11 proceeding other than in accordance with the proposed prepackaged plan, fluctuation of the borrowing base and other limitations that may affect the Company's ability to borrow under its revolving credit facilities or otherwise, the Company's relationship with and payment terms provided by its trade creditors, additional financing requirements, the results of renegotiating certain key commercial agreements, dispositions, acquisitions and integration costs, development of new products and services, the effect of competitive products or pricing, the effect of commodity and raw material prices, the impact of supply chain cost management initiatives, restructuring risks, enterprise resource planning implementation risks, customs duty claims, litigation uncertainties and warranty claims, conditions in the automotive industry, foreign currency fluctuations, costs related to re-sourcing and outsourcing products, the effect of economic conditions and other uncertainties previously detailed in the Company's filings with the SEC. Due to these uncertainties, the Company cannot assure readers that any forward- looking statements will prove to have been correct. Remy International is under no obligation to (and expressly disclaims any such obligation to) update or alter any forward-looking statements whether as a result of new information, future events or otherwise. |
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