Hayes Lemmerz reviewing loan amendment options as bond deal gets pulled

By Sara Rosenberg

New York, March 17 - Hayes Lemmerz International Inc. is contemplating its loan amendment options now that it decided to withdraw its €120 million offering of senior unsecured notes, according to a market source. Successful completion of the bond deal had been a condition of the originally proposed amendment getting done.

"The amendment closing was contingent on the pay down of the term loan B, so there may be some changes, but it's not pulled," the source said.

Under the original amendment proposal, which was launched to lenders on March 3, the company was looking to reprice its $450 million term loan B at Libor plus 325 basis points from Libor plus 375 basis points.

Furthermore, the company was looking to modify some financial covenants and gain permission to use about 50% of the net proceeds from the proposed divestiture of the company's Commercial Highway Hub and Drum business for capital expenditures.

The company planned on using about half of the net proceeds from the notes offering for general corporate purposes and the balance to repay a portion of its term loan facility.

"As a result of recent industry announcements, current conditions in the high-yield market are no longer attractive. Given other available alternatives, we did not feel a transaction was appropriate at current interest rates," said James Yost, Hayes' vice president of finance and chief financial officer, in a company news release.

"We will continue to pursue more favorable actions to enhance liquidity and implement our growth strategy, such as our previously announced plans for an international accounts receivable securitization program and sale of our Commercial Highway Hub and Drum business.

"We are currently in discussions with our lenders to complete certain previously announced amendments to the credit agreement, including our ability to retain a portion of the proceeds from the proposed divestiture, favorably modify the financial covenants and increase the revolving loan."

Citigroup is the lead bank on the deal.

Hayes Lemmerz is a Northville, Mich., supplier of automotive and commercial highway wheels, brakes, and powertrain, suspension, structural and other lightweight components.

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