Hayes Lemmerz lacks liquidity to last through May, eyes bankruptcy

By Caroline Salls

Pittsburgh, May 11 - Hayes Lemmerz International, Inc. said it does not have enough liquidity to fund its operations through May and it will need to recapitalize and restructure its debt through a Chapter 11 bankruptcy filing, according to a 10-K filed Monday with the Securities and Exchange Commission.

In connection with the potential bankruptcy filing, the company said a majority of the lenders under its new credit facility have agreed to provide up to $100 million in debtor-in-possession financing, $80 million of which has been committed under a commitment letter.

If the bankruptcy court does not approve the DIP financing or the company cannot implement a successful plan of reorganization, Hayes Lemmerz said it would not be able to continue as a going concern.

The company said the principal sources of liquidity for its operating, capital expenditure, debt service, restructuring and reorganization requirements are expected to be cash flows from continuing operations, cash and cash equivalents on hand and proceeds of its trade receivable securitization and financing programs.

According to the 10-K, availability under Hayes Lemmerz's domestic trade receivable securitization program has been significantly reduced because of the inability to finance receivables from Ford Motor Co. and General Motors Corp., with total availability capped at $5 million and no additional advances being made under this program.

In addition, the company said its foreign receivable financing programs provide other parties with significant discretion to discontinue financing receivables from some customers, which could also reduce availability under these facilities, particularly in light of Hayes Lemmerz's receipt of a going concern warning from its auditors.

Hayes Lemmerz said all of its accounts receivables facilities were fully utilized as of Jan. 31, and it may need to repay these facilities, which would further reduce liquidity.

As of Jan. 31, the company's revolving credit facility was fully drawn, and any repayments under the revolver are prohibited unless the company can achieve EBITDA of at least $200 million for the 12 months preceding the date of the repayment.

"In light of the continuing deterioration in the global economy and the automotive industry in particular, these sources of liquidity are not sufficient to meet our likely requirements and may not continue to be available," Hayes Lemmerz said in the filing.

The company said it expects the holders of its notes to receive a minimum distribution under any potential plan of reorganization, and those notes could be cancelled.

Hayes Lemmerz is a Northville, Mich., maker of automotive and commercial highway wheels.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.