CHICAGO -- Bankrupt auto interiors supplier Collins & Aikman said on Friday its main customers have agreed to make loans, provide needed tools and pay temporary price increases to continue its reorganization.
Collins & Aikman, which filed for protection from creditors in May, was forced to seek alternative financing after its weak condition left it able to support only $150 million of $300 million in debtor-in-possession financing from J.P. Morgan.
DaimlerChrysler AG, Ford Motor Co., General Motors, Honda Motor Co. Ltd., Nissan Motor Co. Ltd. and Toyota Motor Corp. had already provided a $30 million bridge loan to the company.
And on Thursday, a bankruptcy judge allowed the group to loan Collins & Aikman $82.5 million more and pay $82.5 million in price increases to replace the lost debtor in possession financing.
The customer group also agreed to pay directly for Collins & Aikman's estimated $140 million of capital needs over the next three months to preserve cash. Typically, automakers would reimburse the company for tooling costs months later.
In return, Collins & Aikman and the automakers have agreed not to make any changes to current or awarded programs through Sept. 30. Collins & Aikman has agreed to complete a business plan by Aug. 31. The customer group accounts for about 85 percent of Collins & Aikman's North American revenue.