Hayes-Lemmerz releases details of plan to emerge from Chapter 11

By Carlise Newman

Chicago, Feb. 20 - Hayes-Lemmerz released details of its previously announced restructuring plan in a disclosure statement and set April 9 for the confirmation hearing. In addition, the company said the United States Bankruptcy Court for the District of Delaware approved the company's amended disclosure statement relating to the plan, keeping the voluntary Chapter 11 reorganization on schedule.

The supplier of automotive accessories such as wheels and brakes said its amended disclosure statement and reorganization plan already has support from key creditor constituencies, including the agent for the prepetition lending group, the largest holder of the company's senior notes and the Official Committee of Unsecured Creditors.

Under the proposed reorganization plan, lenders under Hayes-Lemmerz's secured credit facility with claims of $789.59 million will receive $450 million in cash, 15.03 million shares of new common stock and under certain circumstance 50.1% of the shares of new preferred stock or 50.1% of shares of reorganized HLI stock. The lenders will receive full recovery.

Holders of Hayes-Lemmerz's senior notes with $316.13 million of claims will receive 14.37 million shares of new common stock, shares of the remaining senior note proceeds, and under certain circumstances the pro rata amount of either 47.9% of the new preferred stock or 47.9% of the shares of reorganized HLI stock. Recovery for senior noteholders is 95%.

Holders of the company's subordinated notes with $886.92 million of claims will receive a "de minimis" recovery rate. Those voting in favor of the plan will receive series A warrants and distributions from the HLI creditor trust.

General unsecured claims totaling $183.18 million will receive 600,000 shares of new common stock, a distribution of pro rata amount of the series B warrants and either 2% of new preferred stock or 2% of reorganized HLI stock. Recovery for this group will be 6.6%.

For exit financing, Hayes-Lemmerz said it expects to enter into a new credit facility of up to $650 million when it emerges from Chapter 11. Proceeds will be used to repay its DIP facility, make other payments required to be made on the plan's effective date and conduct its operations after the reorganization. The company said it is in discussion with several lenders and has already received preliminary exit financing proposals. All of the real and personal property of the debtors will most likely secure the new credit facility.

The plan is subject to, among other things, a vote of the various classes of constituents, confirmation by the Bankruptcy Court and the successful procurement of exit financing.

The company intends to solicit votes for its plan of reorganization during much of the month of March.

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