Debt to be Reduced by approximately $360 Million
All Trade Vendors to be Paid in Full
ANDERSON, Ind., June 15 /PRNewswire/ -- Remy International Inc., today
announced that it has reached agreement with holders of approximately 83%
of its 8 5-8% Senior Notes, 84% of its 9 3-8% Senior Subordinated Notes,
and 75% of its 11% Senior Subordinated Notes on the terms of a consensual
financial restructuring that would reduce the Company's debt obligations by
approximately $360 million. The Company and the consenting noteholders have
entered into a Plan Support Agreement pursuant to which the noteholders
have agreed to consummate the restructuring through a prepackaged plan of
reorganization.
"We have reached a major milestone toward achieving our goal of
substantially reducing our debt burden. Once our financial restructuring is
completed, Remy's capital structure will provide a foundation for
sustainable profitability and better position the Company to meet the
challenges of our industry head on," said President and Chief Executive
Officer John Weber.
A key feature of the prepackaged plan is that all trade creditors,
suppliers, customers and employees will receive amounts owed to them in the
ordinary course of business. The Company intends to begin soliciting votes
on the prepackaged plan from holders of its unsecured notes promptly
following conclusion of key customer negotiations. Following the
solicitation period, the Company expects to commence a prepackaged Chapter
11 proceeding in order to implement the plan. The proceeding is expected to
last between 45 and 60 days.
"This ensures trade creditors, suppliers, customers and employees see
no difference in Remy's operations while we complete our recapitalization.
The reorganization plan will provide for uninterrupted payment of our
existing and future obligations to these constituents and provide for
seamless continuation of our operations," Mr. Weber commented.
In conjunction with the anticipated prepackaged restructuring, Remy is
in the process of obtaining both debtor-in-possession (DIP) financing and
an approximately $330 million senior secured exit credit facility, the
latter to become effective upon consummation of the prepackaged plan. The
Company anticipates that the exit financing will consist of a term loan of
approximately $205 million, with the remainder as a $125 million revolving
credit facility.
The Company is making substantial progress in renegotiating certain key
commercial agreements to improve margins, its other stated objective with
respect to strengthening the Company. "In addition to consensually
improving the capital structure, I am very pleased by the cooperative
nature of discussions with certain customers. The spirit of cooperation
exhibited by both our noteholders and key customers are essential for Remy
to continue as a strong industry player," said Mr. Weber.
The significant elements of the prepackaged plan include:
- Repaying the Second Priority Senior Secured Floating Rate Notes in
full.
- Raising $75 million in preferred equity through a rights offering to be
made to holders of the Company's Senior Notes and Senior Subordinated
Notes.
- Exchanging the Company's existing 8 5-8% Senior Notes for $100 million
of new third-lien Pay-in-Kind (PIK) Notes and approximately $50 million
in cash.
- Converting the 9 3-8% Senior Subordinated Notes and 11% Senior
Subordinated Notes into 100% of the common equity of the reorganized
company.
- Cancelling all of the Company's existing equity interests.
"Today's very positive announcement is the result of extensive
negotiations with our stakeholders and hard work with key customers, and we
believe that it provides the highest value and best outcome for all of
Remy's constituents," said Mr. Weber.
In light of the agreement, Remy elected to not make the June 15
interest payment in respect of the 8 5-8% Senior Notes.
Remy International headquartered in Anderson, Indiana, is a leading
manufacturer, remanufacturer and distributor of Delco Remy brand heavy-duty
systems and Remy brand starters and alternators, locomotive products and
hybrid power technology. The Company also provides a worldwide components
core-exchange service for automobiles, light trucks, medium and heavy-duty
trucks and other heavy-duty, off-road and industrial applications.
Caution Regarding Forward-Looking Statements:
This press announcement contains statements relating to future results
of the Company that are "forward-looking statements" as defined in the
Private Securities Litigation Reform Act of 1995 (the "Act") or by the
Securities and Exchange Commission ("SEC") in its rules, regulations and
releases. The Company desires to take advantage of the "safe harbor"
provisions in the Act for forward-looking statements made in this press
announcement. Any statements set forth in this press announcement with
regard to its expectations as to financial results and other aspects of its
business may constitute forward- looking statements. These statements
relate to the Company's future plans, objectives, expectations and
intentions and may be identified by words like "believe," "expect," "may,"
"will," "should," "seek," or "anticipate," and similar expressions. The
Company cautions readers that any such forward- looking statements are
based on assumptions that the Company believes are reasonable, but are
subject to a wide range of risks including, but not limited to, risks
associated with the satisfaction of the conditions precedent to the Plan
Support Agreement including but not limited to the Company securing both
DIP and exit financing and the occurrence of a termination event
thereunder, the effect of a default under the indentures governing the
Notes, future financial results and liquidity including the Company's
continued ability to finance its operations in the normal course during the
solicitation of votes on the Company's prepackaged plan and to make
required interest payments, the continuation of forbearance agreements with
respect to certain defaults and payments and the potential necessity for
additional forbearance agreements, the possibility that the Company may
need to commence a chapter 11 proceeding other than in accordance with the
proposed prepackaged plan, fluctuation of the borrowing base and other
limitations that may affect the Company's ability to borrow under its
revolving credit facilities or otherwise, the Company's relationship with
and payment terms provided by its trade creditors, additional financing
requirements, the results of renegotiating certain key commercial
agreements, dispositions, acquisitions and integration costs, development
of new products and services, the effect of competitive products or
pricing, the effect of commodity and raw material prices, the impact of
supply chain cost management initiatives, restructuring risks, enterprise
resource planning implementation risks, customs duty claims, litigation
uncertainties and warranty claims, conditions in the automotive industry,
foreign currency fluctuations, costs related to re-sourcing and outsourcing
products, the effect of economic conditions and other uncertainties
previously detailed in the Company's filings with the SEC. Due to these
uncertainties, the Company cannot assure readers that any forward- looking
statements will prove to have been correct. Remy International is under no
obligation to (and expressly disclaims any such obligation to) update or
alter any forward-looking statements whether as a result of new
information, future events or otherwise.
SOURCE Remy International, Inc.
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Related links:
http://www.remyinc.com/
http://www.prnewswire.com/comp/111635.html/
CONTACT:
Anita-Marie Laurie of Sitrick And Company,
+1-310-788-2850, for Remy International
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