As expected Lear Corp. filed for Chapter 11. The auto parts maker announced
last week that it intended to file for bankruptcy protection with a prepack.
Lear has secured up to
$500 million in debtor-in-possession financing from a consortium led by J.P. Morgan Chase & Co. (NYSE:JPM) and Citigroup Inc. (NYSE:C), according to an SEC filing. (Subscribers see the full story in The Deal Pipeline.)
In 2007 the debtor rejected a buyout bid of $2.9 billion from billionaire financier and activist shareholder Carl Icahn.
See more details of the filing in the press release and petition below. - Maria Woehr 0914326090706000000000023
Lear Secures Support From a Majority of its Creditors to Proceed With Debt Restructuring Plan
Company Initiates Previously Announced Voluntary Reorganization
Proceedings for certain U.S. and Canadian Subsidiaries Under Chapter 11
SOUTHFIELD, Mich., July 7 /PRNewswire-FirstCall/ -- Lear Corporation
(OTC: LEAR), a leading global supplier of automotive seating systems,
electrical distribution systems and electronic products, announced
today that it has received the support it was seeking from its bank
lenders and bondholders to move forward with its previously announced
debt restructuring plan. To implement the restructuring, as previously
announced, the Company and certain of its U.S. and Canadian
subsidiaries have filed voluntary petitions in the United States
Bankruptcy Court for the Southern District of New York seeking relief
under the provisions of Chapter 11 of the United States Bankruptcy
Code. Lear's subsidiaries outside the U.S. and Canada are not part of
the Chapter 11 filings.
On July 1, the Company said it had reached an agreement in
principle regarding a consensual debt restructuring with steering
committees representing its secured lenders and its bondholders. At
that time, the plan had the support of a majority of the members of a
steering committee of the Company's secured lenders and a steering
committee of bondholders acting on behalf of an ad hoc group of
bondholders. Since then, the Company has secured support from
additional secured lenders and bondholders and has entered into
agreements supporting the restructuring plan with approximately 68% in
principal amount of its secured lenders and more than 50% in principal
amount of its bondholders.
Under the proposed restructuring plan, which needs to be
approved by the Bankruptcy Court, Lear's trade creditors will be paid
in full subject to certain limited exceptions. To this end, the Company
has filed motions seeking to continue to pay trade creditors under
normal terms in the ordinary course of business.
The Company also said that it has sought approval from the
Bankruptcy Court to continue to provide pay and benefits to its
employees worldwide without interruption and to continue its normal
course funding of its pension obligations in the U.S. and Canada.
Bob Rossiter, Lear's Chairman, Chief Executive Officer and
President, said, "We are conducting business as usual and are very
pleased to have received strong support from our lender and bondholder
groups for our debt restructuring plan. We intend to proceed on an
expedited basis and expect to submit the plan to the Bankruptcy Court
within 60 days. Our goal is to emerge from this process quickly and
with an appropriate capital structure to support our long-term business
objectives as a leading global competitor with the financial
flexibility to build on our strengths and take advantage of future
growth opportunities."
As previously announced, the Company has received commitments
from a syndicate of secured lenders, led by J.P. Morgan and Citigroup,
for $500 million in new money debtor-in-possession (DIP) financing. The
proposed DIP financing, subject to customary conditions, provides
additional financial flexibility that supplements Lear's significant
existing cash balances. Additionally, the DIP agreement includes
provisions that, subject to certain conditions, provide for exit
financing upon Lear's emergence from Chapter 11.
Lear has filed several other customary "first day motions" with
the Bankruptcy Court, including with respect to its cash management
procedures, which will help it to continue conducting business without
interruption while it pursues its restructuring on an expedited basis.
Lear's legal advisors are Kirkland & Ellis LLP and Winston
& Strawn LLP; its restructuring advisor is Alvarez & Marsal;
and its financial advisor is Miller Buckfire & Co. More information
about Lear's restructuring is available through the Company's website
at www.Lear.com.
As expected Lear Corp. filed for Chapter 11. 
