Bankruptcy speculation encircled troubled auto supplier Dana Corp. early Friday after the company's stock price on Thursday hit new lows and Wall Street credit agencies lowered their ratings on the company's debt.

The driveline, chassis and heavy components maker on Wednesday said it missed a $21 million interest payment on its bond debt. Earlier in the week, it said it expected to conclude negotiations with its bankers and financiers within two weeks. Dana has been attempting to renegotiate some $675 million in lines of credit.

Without new lines of credit, the company could file for bankruptcy protection, according to the Standard & Poor's ratings service.

"Failure to obtain a new (credit line) facility would lead to default and likely bankruptcy," S&P analyst Daniel DiSenso wrote in a Thursday report. Both S&P and Moody's Investors Service downgraded Dana's credit ratings for a second time in a week.

The news prompted the second major sell-off of Dana stock in five trading days. Shares in the company closed Thursday at $1.04, down 44 percent, in massive trading on the New York Stock Exchange. Reuters reported that the closing price was an all-time low, but the New York Stock Exchange could not confirm that benchmark. The stock on Feb. 24 fell 52 percent.

Dana, a 100-year-old icon of the automotive supply chain based in Toledo, Ohio, has been beset by multiple challenges in recent months, including a federal accounting probe, declining business from Ford Motor Co. and General Motors, and higher raw material costs. The company posted a $1.23 billion loss through the first nine months of 2005 -- all but $20 million of the loss stemmed from one-time charges and write-downs.

The Wall Street Journal has reported that Dana has retained two well known restructuring and turnaround firms. It also reported this week that some of Dana's vendors are asking for payment in advance.

If Dana files for bankruptcy, it would be the second major automotive supplier to seek reorganization in the last five months. Delphi Corp., the former unit of GM, filed for protection on Oct. 8.

Dana would be the third largest automotive industry bankruptcy in history, based on total assets, behind Delphi and Federal-Mogul Corp. Dana ranks No. 15 on the Automotive News list of the top 100 global suppliers with worldwide original-equipment automotive parts sales of $9.06 billion in 2004.

You may e-mail Philip Nussel at pnussel@crain.com