Dura Automotive (NASDAQ:DRRA)
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DURA Automotive Systems, Inc. (Nasdaq:DRRA), announced today that the
company and its U.S. and Canadian subsidiaries have filed for protection
under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy
Court for the District of Delaware. DURA's European and other operations
outside of the U.S. and Canada, accounting for approximately 51% of
DURA's revenue, are not part of the filing.
DURA’s decision to pursue a reorganization
under Chapter 11 came after evaluating all options to restructure its
balance sheet to reduce the company’s
indebtedness and interest expense. DURA elected to pursue a
restructuring under court protection as it will facilitate both a
financial restructuring and DURA’s ongoing
operational restructuring, the successful implementation of which will
help DURA overcome current financial and industry pressures and position
the company for long-term success.
As part of the filing, DURA has arranged for approximately $300 million
in Debtor-in-Possession (DIP) financing from Goldman Sachs, GE Capital
and Barclays, which will be used by DURA to fund normal business
operations and continue its operational restructuring program initiated
in February 2006. The company has requested, and expects to receive,
permission from the Court to pay employee salaries, wages and benefits.
DURA has also asked for authority to pay certain critical pre-petition
vendor claims and will continue to pay its post-petition obligations in
the ordinary course of business. DURA said the steps it is taking will
help ensure continuity of supply to customers.
“With industry conditions tightening
further, we concluded that our capital structure is no longer
appropriate,” said Larry Denton, chairman and
chief executive officer of DURA Automotive Systems. “The
Chapter 11 process will enable us to work with our creditors on a plan
that will reduce our debt burden and align the business to meet the
challenges of tomorrow’s automotive
marketplace.”
“The entire North American automotive supply
industry is at an extremely difficult juncture,”
continued Denton. “Pursuing a financial
reorganization under court protections is the prudent course of action
and positioning us for long-term sustainability. This is in the best
interest of our employees, customers, vendors and other business
partners.”
DURA said the accelerating deterioration of the North American
automotive industry, in particular, further production cuts by the major
U.S. OEMs and the escalating cost of raw materials, adversely affected
DURA’s cash position prior to the filing. The
DIP financing will improve DURA’s liquidity,
providing the company with sufficient working capital to continue normal
operations and fund its turnaround.
In February 2006, DURA initiated an operational restructuring program,
focused on improving quality, lowering production costs, increasing
EBITDA and rightsizing the business to account for capacity reductions.
The operational restructuring program is generating improvements today
and will continue to generate additional improvements throughout the
bankruptcy process.
“Once our operational and financial programs
are complete, we believe that DURA will have improved its competitive
position in the automotive supply market, combining best-in-class
quality with best-in-cost production through our global
lean-manufacturing footprint,” said Denton. “DURA
plans to continue to serve customers with innovative, competitively
priced products that meet the highest standards of quality today and
into the future.”
About DURA Automotive Systems, Inc.
DURA Automotive Systems, Inc., is a leading independent designer and
manufacturer of driver control systems, seating control systems, glass
systems, engineered assemblies, structural door modules and exterior
trim systems for the global automotive industry. The company is also a
leading supplier of similar products to the recreation vehicle (RV) and
specialty vehicle industries. DURA sells its automotive products to
every North American, Japanese and European original equipment
manufacturer (OEM) and many leading Tier 1 automotive suppliers. DURA is
headquartered in Rochester Hills, Mich. Information about DURA and its
products is available on the Internet at www.DURAauto.com.
Forward-looking Statements
This press release, as well as other statements made by DURA may contain
forward-looking statements within the “safe
harbor” provisions of the Private Securities
Litigation Reform Act of 1995, that reflect, when made, the company’s
current views with respect to current events and financial performance.
Such forward-looking statements are and will be, as the case may be,
subject to many risks, uncertainties and factors relating to the company’s
operations and business environment which may cause the actual results
of the company to be materially different from any future results,
express or implied, by such forward-looking statements. Factors that
could cause actual results to differ materially from these
forward-looking statements include, but are not limited to, the
following: (i) the ability of the company to continue as a going
concern; (ii) the ability of the company to operate pursuant to the
terms of the debtor-in-possession (“DIP”)
financing facility; (iii) the company’s
ability to obtain court approval with respect to motions in the chapter
11 proceeding prosecuted by it from time to time; (iv) the ability of
the company to develop, prosecute, confirm and consummate one or more
plans of reorganization with respect to the Chapter 11 cases; (iv) risks
associated with third parties seeking and obtaining court approval to
terminate or shorten the exclusivity period for the company to propose
and confirm one or more plans of reorganization, for the appointment of
a chapter 11 trustee or to convert the cases to chapter 7 cases; (v) the
ability of the company to obtain and maintain normal terms with vendors
and service providers; (vi) the company’s
ability to maintain contracts that are critical to its operations; (vii)
the potential adverse impact of the Chapter 11 cases on the company’s
liquidity or results of operations; (viii) the ability of the company to
execute its business plans, and strategy, including the operational
restructuring initially announced in February 2006, and to do so in a
timely fashion; (ix) the ability of the company to attract, motivate
and/or retain key executives and associates; (x) the ability of the
company to avoid or continue to operate during a strike, or partial work
stoppage or slow down by any of its unionized employees; (x) general
economic or business conditions affecting the automotive industry (which
is dependent on consumer spending), either nationally or regionally,
being less favorable than expected; and (xi) increased competition in
the automotive components supply market. Other risk factors are listed
from time to time in the company’s United
States Securities and Exchange Commission reports, including, but not
limited to the Annual Report on Form 10-K for the year ended
December 31, 2005. DURA disclaims any intention or obligation to update
or revise any forward-looking statements, whether as a result of new
information, future events and/or otherwise.
Similarly, these and other factors, including the terms of any
reorganization plan ultimately confirmed, can affect the value of the
company’s various pre-petition liabilities,
common stock and/or other equity securities. Additionally, no assurance
can be given as to what values, if any, will be ascribed in the
bankruptcy proceedings to each of these constituencies. A plan of
reorganization could result in holders of DURA’s
common stock receiving no distribution on account of their interest and
cancellation of their interests. Under certain conditions specified in
the Bankruptcy Code, a plan of reorganization may be confirmed
notwithstanding its rejection by an impaired class of creditors or
equity holders and notwithstanding the fact that equity holders do not
receive or retain property on account of their equity interests under
the plan. In light of the foregoing, the company considers the value of
the common stock to be highly speculative and cautions equity holders
that the stock may ultimately be determined to have no value.
Accordingly, the company urges that appropriate caution be exercised
with respect to existing and future investments in DURA’s
common stock or other equity interests or any claims relating to
pre-petition liabilities.
DURA Automotive Systems, Inc. (Nasdaq:DRRA), announced today that
the company and its U.S. and Canadian subsidiaries have filed for
protection under Chapter 11 of the U.S. Bankruptcy Code with the U.S.
Bankruptcy Court for the District of Delaware. DURA's European and
other operations outside of the U.S. and Canada, accounting for
approximately 51% of DURA's revenue, are not part of the filing.
DURA's decision to pursue a reorganization under Chapter 11 came
after evaluating all options to restructure its balance sheet to
reduce the company's indebtedness and interest expense. DURA elected
to pursue a restructuring under court protection as it will facilitate
both a financial restructuring and DURA's ongoing operational
restructuring, the successful implementation of which will help DURA
overcome current financial and industry pressures and position the
company for long-term success.
As part of the filing, DURA has arranged for approximately $300
million in Debtor-in-Possession (DIP) financing from Goldman Sachs, GE
Capital and Barclays, which will be used by DURA to fund normal
business operations and continue its operational restructuring program
initiated in February 2006. The company has requested, and expects to
receive, permission from the Court to pay employee salaries, wages and
benefits. DURA has also asked for authority to pay certain critical
pre-petition vendor claims and will continue to pay its post-petition
obligations in the ordinary course of business. DURA said the steps it
is taking will help ensure continuity of supply to customers.
"With industry conditions tightening further, we concluded that
our capital structure is no longer appropriate," said Larry Denton,
chairman and chief executive officer of DURA Automotive Systems. "The
Chapter 11 process will enable us to work with our creditors on a plan
that will reduce our debt burden and align the business to meet the
challenges of tomorrow's automotive marketplace."
"The entire North American automotive supply industry is at an
extremely difficult juncture," continued Denton. "Pursuing a financial
reorganization under court protections is the prudent course of action
and positioning us for long-term sustainability. This is in the best
interest of our employees, customers, vendors and other business
partners."
DURA said the accelerating deterioration of the North American
automotive industry, in particular, further production cuts by the
major U.S. OEMs and the escalating cost of raw materials, adversely
affected DURA's cash position prior to the filing. The DIP financing
will improve DURA's liquidity, providing the company with sufficient
working capital to continue normal operations and fund its turnaround.
In February 2006, DURA initiated an operational restructuring
program, focused on improving quality, lowering production costs,
increasing EBITDA and rightsizing the business to account for capacity
reductions. The operational restructuring program is generating
improvements today and will continue to generate additional
improvements throughout the bankruptcy process.
"Once our operational and financial programs are complete, we
believe that DURA will have improved its competitive position in the
automotive supply market, combining best-in-class quality with
best-in-cost production through our global lean-manufacturing
footprint," said Denton. "DURA plans to continue to serve customers
with innovative, competitively priced products that meet the highest
standards of quality today and into the future."
About DURA Automotive Systems, Inc.
DURA Automotive Systems, Inc., is a leading independent designer
and manufacturer of driver control systems, seating control systems,
glass systems, engineered assemblies, structural door modules and
exterior trim systems for the global automotive industry. The company
is also a leading supplier of similar products to the recreation
vehicle (RV) and specialty vehicle industries. DURA sells its
automotive products to every North American, Japanese and European
original equipment manufacturer (OEM) and many leading Tier 1
automotive suppliers. DURA is headquartered in Rochester Hills, Mich.
Information about DURA and its products is available on the Internet
at www.DURAauto.com.
Forward-looking Statements
This press release, as well as other statements made by DURA may
contain forward-looking statements within the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995, that reflect,
when made, the company's current views with respect to current events
and financial performance. Such forward-looking statements are and
will be, as the case may be, subject to many risks, uncertainties and
factors relating to the company's operations and business environment
which may cause the actual results of the company to be materially
different from any future results, express or implied, by such
forward-looking statements. Factors that could cause actual results to
differ materially from these forward-looking statements include, but
are not limited to, the following: (i) the ability of the company to
continue as a going concern; (ii) the ability of the company to
operate pursuant to the terms of the debtor-in-possession ("DIP")
financing facility; (iii) the company's ability to obtain court
approval with respect to motions in the chapter 11 proceeding
prosecuted by it from time to time; (iv) the ability of the company to
develop, prosecute, confirm and consummate one or more plans of
reorganization with respect to the Chapter 11 cases; (iv) risks
associated with third parties seeking and obtaining court approval to
terminate or shorten the exclusivity period for the company to propose
and confirm one or more plans of reorganization, for the appointment
of a chapter 11 trustee or to convert the cases to chapter 7 cases;
(v) the ability of the company to obtain and maintain normal terms
with vendors and service providers; (vi) the company's ability to
maintain contracts that are critical to its operations; (vii) the
potential adverse impact of the Chapter 11 cases on the company's
liquidity or results of operations; (viii) the ability of the company
to execute its business plans, and strategy, including the operational
restructuring initially announced in February 2006, and to do so in a
timely fashion; (ix) the ability of the company to attract, motivate
and/or retain key executives and associates; (x) the ability of the
company to avoid or continue to operate during a strike, or partial
work stoppage or slow down by any of its unionized employees; (x)
general economic or business conditions affecting the automotive
industry (which is dependent on consumer spending), either nationally
or regionally, being less favorable than expected; and (xi) increased
competition in the automotive components supply market. Other risk
factors are listed from time to time in the company's United States
Securities and Exchange Commission reports, including, but not limited
to the Annual Report on Form 10-K for the year ended December 31,
2005. DURA disclaims any intention or obligation to update or revise
any forward-looking statements, whether as a result of new
information, future events and/or otherwise.
Similarly, these and other factors, including the terms of any
reorganization plan ultimately confirmed, can affect the value of the
company's various pre-petition liabilities, common stock and/or other
equity securities. Additionally, no assurance can be given as to what
values, if any, will be ascribed in the bankruptcy proceedings to each
of these constituencies. A plan of reorganization could result in
holders of DURA's common stock receiving no distribution on account of
their interest and cancellation of their interests. Under certain
conditions specified in the Bankruptcy Code, a plan of reorganization
may be confirmed notwithstanding its rejection by an impaired class of
creditors or equity holders and notwithstanding the fact that equity
holders do not receive or retain property on account of their equity
interests under the plan. In light of the foregoing, the company
considers the value of the common stock to be highly speculative and
cautions equity holders that the stock may ultimately be determined to
have no value. Accordingly, the company urges that appropriate caution
be exercised with respect to existing and future investments in DURA's
common stock or other equity interests or any claims relating to
pre-petition liabilities.