Harvard Industries Inc. has won approval for a line of credit worth $175 million, enough to keep the bankrupt supplier in business for the time being.
The Tampa, Fla.-based metal-castings company announced last week that it had won court approval for a $65 million loan, plus $110 million in revolving credit.
Harvard sought the refinancing last month, after it defaulted on $384 million in debt and sought Chapter 11 bankruptcy protection.
'This provides the company with sufficient working capital funds to enable us to continue normal operations,' said company Chairman John Adams.
The company now faces two more hurdles: It must negotiate compensation for disgruntled bondholders, and it must find a buyer for its troubled Doehler-Jarvis subsidiary.
Harvard may ask bondholders to accept stock in the company in lieu of debt payments, said company Vice President Richard Dawson.
'In a perfect world, we would come out of bankruptcy with a debt-free balance sheet, and without Doehler-Jarvis,' Dawson said.
That might be easier said than done. Harvard's bonds currently trade at 40 cents to the dollar, indicating investors' doubt about the company's long-term prospects.
The new line of credit 'is a necessity, but it doesn't change my negative view of the company,' said David Bitterman, a fixed-income analyst for Bear Stearns. 'The investment community hasn't really responded positively.'
Bitterman and other analysts are concerned about Doehler-Jarvis of Toledo, Ohio. The subsidiary's factories have struggled to meet production targets with poorly maintained machinery.
For the quarter ending March 31, Harvard wrote off some assets and declared a loss of $172 million on net sales of $209 million.
Much of that loss was due to Doehler-Jarvis. Harvard purchased the subsidiary in 1995 for $218 million. Analyst Fred Taylor of Salomon Brothers questions whether Harvard can sell it for half that much.
FIX IT, SELL IT
'They need to clean it up, fix it and sell it. That may take a year,' Taylor said.
Harvard also is trying to sell two other divisions: Harvard Interiors, which makes office chairs, and Harman Automotive Inc., which makes door handles and mirrors.
In the early 1990s, Harman's quality and delivery problems caused Ford Motor Co. and Chrysler Corp. to quit taking bids.
Ford is reconsidering Harman for possible business after 2000.
Last year, Harvard disclosed that a bidder had offered $18 million for Harman. The bidder eventually backed away from that offer, although negotiations continue.
Harvard ranks 48th on the Automotive News list of top original equipment suppliers to North America.