Automakers, Collins & Aikman strike deal

DETROIT -- Bankrupt auto parts supplier Collins & Aikman Corp. has reached a deal with major automakers that commits them to pay on expedited terms and support its effort to sell off operations, the company said today.

In a filing with the U.S. Securities and Exchange Commission, the Southfield, Michigan-based supplier said the deal had been approved by federal bankruptcy court in Detroit.

Collins & Aikman, which supplies components for a wide range of vehicles produced in North America, said last month it would sell off its business units rather than seek to emerge from bankruptcy as a stand-alone company.

Since it filed for bankruptcy protection in May 2005, Collins & Aikman has received loans, tools and temporary price increases from its main automotive customers in order to avoid a costly halt to part shipments.

That support has included $165 million in price increases and loans and another $30 million bridge loan.

A spokesman for Collins & Aikman said the company had not detailed the value of the latest agreement, which was struck with the Detroit-based automakers, Honda Motor Co. and Mazda Motor Corp.

The company said the agreement with its major customers would also allow it to use cash collateral to satisfy some of its expenses and to pay certain employee bonuses.

Detroit-based automakers have been pressuring suppliers to cut costs in order to improve margins, an effort that has run into resistance from some parts makers that are themselves restructuring or attempting to emerge from bankruptcy.

Chrysler, the U.S. unit of DaimlerChrysler AG, is the largest single customer for Collins & Aikman.

Taken together, Chrysler, Ford Motor Co. and General Motors account for about 85 percent of the company's annual revenue, which totaled about $2.8 billion in 2005.

Collins & Aikman, which is trying to sell off its 45 plants in the United States, Canada and Mexico, has identified a lead bidder for its unit that supplies carpeting and sound-deadening materials for vehicles.

The company has not identified that bidder, but a person familiar with the matter said it was Cerberus Capital Management, an investment group that has also been looking at some of the assets that bankrupt parts supplier Delphi Corp. is trying to sell.

Collins & Aikman is also looking to sell a plastics unit that supplies injected-molded materials for auto interiors and a third business units that makes convertible roof assemblies.

Those two units account for 31 of its North American plants.

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