Plan Positions Dana to Emerge From Chapter 11 with Strong Balance Sheet
TOLEDO, Ohio, Aug. 31 /PRNewswire-FirstCall/ -- Dana Corporation (OTC
Bulletin Board: DCNAQ) announced today that the company and its debtor
subsidiaries have submitted a proposed Plan of Reorganization and related
Disclosure Statement to the United States Bankruptcy Court for the Southern
District of New York.
(Logo: http://www.newscom.com/cgi-bin/prnh/19990903/DANA )
The Plan of Reorganization outlines how Dana proposes to emerge from
Chapter 11, including the proposed treatment of creditors and equity
holders. The Plan contemplates an investment of up to $750 million in new
convertible preferred stock in the reorganized Dana. The Disclosure
Statement contains a discussion of the issues that led to the Chapter 11
filing, a description of the Plan provisions, and an analysis of the Plan's
feasibility. With this filing, Dana is one step closer to achieving its
goal of emerging from Chapter 11 protection by the end of this year.
Dana Chairman and Chief Executive Officer Mike Burns said, "When we
entered Chapter 11 in March 2006, we committed to fixing our business
comprehensively -- financially and operationally -- and to implementing
fundamental change, not simply incremental improvement. As detailed in our
Disclosure Statement, Dana has made substantial progress in addressing our
challenges and building a sustainable business that is well positioned to
compete in a challenging global environment. We are on track to emerge as a
stronger, financially stable company that is equipped to make significant
investments in our programs and to continue providing innovative products
of the highest quality to our customers worldwide.
"This has been a very difficult period for all of our constituencies,
including our people -- both current and retired -- and our customers and
suppliers," he said. "I'd like to thank them for their perseverance to
date, which has enabled us to negotiate and begin to implement critical,
enduring solutions to our most serious challenges. We look forward to
continued productive working relationships as we move through the plan
negotiation and approval process."
In November 2006, Dana outlined five goals that it would address during
its reorganization, identifying the key areas where it hoped to achieve a
total of $405 million to $540 million in combined annual cost and margin
improvement.
As outlined in the Disclosure Statement, Dana has worked to achieve
product profitability by:
-- Working with customers to resolve under-performing programs, including
obtaining pricing adjustments to reflect rising material costs;
-- Optimizing its manufacturing footprint by consolidating high-cost
facilities and expanding its presence in lower cost regions;
-- Reducing labor costs, including through changes in employee benefits;
-- Significantly reducing retiree health and welfare costs through
Voluntary Employee Benefit Association (VEBA) trusts to provide
replacement benefits; and
-- Reviewing administrative costs at all levels of its organization to
identify and implement savings.
In total, since entering bankruptcy on March 3, 2006, Dana and its
constituents have identified, agreed upon, and won court approval for
actions that are expected to result in a total of between approximately
$440 million and $475 million in annual savings when fully implemented.
Dana has also completed several strategic initiatives to realign and
focus its business. These include the sale of its trailer axle business;
divestiture of its Engine Products group; the sale of its interest in
GETRAG GmbH & Cie KG, a German automotive components supplier; the
divestiture of its Fluid Products Hose and Tubing business; and the pending
sale of its Fluid Products Coupled Products business. Strategic initiatives
undertaken include the acquisition in 2006 of sole ownership of certain
operations in Mexico that are integral to the company's long-term business
plans, making the initial investment in a joint venture with China's
Dongfeng Motor Co. Ltd., resolving the company's U.K. pension liability
issues, and entering into a $225 million European financing agreement. In
addition, the company negotiated a settlement and new supply contract with
Sypris Technologies, Inc.
Next Steps In Reorganization Process
In the near future, the Court will conduct a hearing to consider
whether the Disclosure Statement, as filed or as it may be amended,
contains adequate information for creditors and equity holders who are
entitled to vote on the Plan to decide whether to accept the Plan. As part
of this process, the Plan and Disclosure Statement may be materially
modified before the Disclosure Statement is approved. Once approved, the
Disclosure Statement and Plan will be sent to claim holders and equity
holders who are entitled to vote on the Plan. Following the voting period,
the Bankruptcy Court will hold a hearing to consider confirmation of the
Plan. Confirmation of the Plan would pave the way for Dana's emergence from
Chapter 11.
Dana's Plan and Disclosure Statement are available at
http://dana.bmcgroup.com.
About Dana Corporation
Dana is a world leader in the supply of axles; driveshafts; and
structural, sealing, and thermal management products; as well as genuine
service parts. The company's customer base includes virtually every major
vehicle and engine manufacturer in the global automotive, commercial
vehicle, and off-highway markets, which collectively produce more than 65
million vehicles annually. Based in Toledo, Ohio, the company's continuing
operations employ approximately 40,000 people in 28 countries and reported
2006 sales of $8.5 billion, with more than half of this revenue derived
from outside the United States. For more information, please visit:
http://www.dana.com.
Forward-Looking Statements
Certain statements and projections contained in the Plan of
Reorganization and/or the Disclosure Statement (and their exhibits) are, by
their nature, forward-looking within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements and
projections are subject to uncertainties relating to the debtors'
operations and business environment and a number of other risks,
uncertainties and assumptions (including, but not limited to, those
discussed in Section XIV of the Disclosure Statement, "Certain Risk Factors
to be Considered") which are difficult to predict and which are, in many
cases, beyond the debtors' control. In light of these risks and
uncertainties, the events and circumstances described in the
forward-looking statements and projections in the Plan and/or the
Disclosure Statement may not occur and the debtors' actual financial
results could differ materially from those expressed or implied in such
forward-looking statements and projections. Dana does not undertake to
publicly update or revise any forward-looking statements or projections
contained in the Plan and/or the Disclosure Statement, whether as a result
of new information, future events, or otherwise.
The Plan of Reorganization and the Disclosure Statement are preliminary
only and subject to material modifications, including, as a result of the
Court-approved Alternative Proposal Procedures, the potential for the
acceptance of an alternative investment proposal. There is no assurance as
to what claims or interests will be satisfied, and in what manner, under
the debtors' plan of reorganization as ultimately confirmed by the
Bankruptcy Court. Investors should exercise appropriate caution with
respect to existing and future investments in any of the debtors'
liabilities and/or securities and should not rely on the current Plan and
Disclosure Statement in making any investment decision.
SOURCE Dana Corporation
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Related links:
http://www.dana.com
http://dana.bmcgroup.com
Photo Notes:
NewsCom: http://www.newscom.com/cgi-bin/prnh/19990903/DANA
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PRN Photo Desk, photodesk@prnewswire.com
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CONTACT:
Media, Chuck Hartlage of Dana Corporation,
+1-419-535-4728
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