Tower Automotive given court OK to pay $1 million in fees for potential equity investors

By Jennifer Lanning Drey

Portland, Ore., Oct. 24 - Tower Automotive, Inc. obtained court approval to make up to a total of $1 million in fee payments to prospective equity investors, according to a source at the hearing.

The approval came Tuesday from the U.S. Bankruptcy Court for the Southern District of New York.

Tower said previously that it believes it will need a substantial equity investment as part of its plan of reorganization, possibly through a rights offering.

As a result, Tower has been in discussions with several parties about the potential equity raise, including institutional creditors who may be willing to backstop a rights offering, according to the company's motion requesting the approval.

While the company said it is in discussions with several senior bondholders to act as potential backstop parties, it may need to include third parties for potential backstop offerings or other forms of equity investment.

The company said the fees would be paid as an incentive to potential equity investors to perform the due diligence to make an investment offering.

The Novi, Mich.-based auto parts maker filed for bankruptcy on Feb. 1, 2005. Its Chapter 11 case number is 05-10578.

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