Meridian first-lien lenders object to new DIP request

By Caroline Salls

Pittsburgh, June 27 - Meridian Automotive Systems Inc.'s informal committee of first-lien lenders objected to the company's request for a new $75 million debtor-in-possession facility, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

The lenders said Meridian is "tapped out," as it failed to obtain DIP financing last month because "unanticipated production cutbacks announced by original equipment manufacturers negatively impacted the company's earnings projections and its ability to secure the existing DIP facility."

The committee said, as a result, Meridian is "hurriedly seeking a smaller facility that will layer an additional $75 million above the first-lien debt and cavalierly subordinate the liens on which the first-lien lenders relied in extending $310 million of credit."

The first-lien lenders said this process of "priming" requires the company to compensate the secured lenders for the decline in the value of their collateral and that they receive the same level of protection negotiated pre-bankruptcy.

The committee said Meridian's new DIP agreement does neither.

A DIP approval hearing is scheduled for Wednesday.

Meridian, a Dearborn, Mich., supplier of front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers, filed for bankruptcy on April 26. Its Chapter 11 case number is 05-11168.

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