Macher, who spent 30 years at Ford Motor Co. and was CEO of Federal-Mogul Corp. for a time, has guided a turnaround since taking the helm in mid-July. Collins & Aikman at the time was in chaos. It entered Chapter 11 with no cash and no plan for operating under bankruptcy protection.
But the business is so critical to automakers that they gave Collins & Aikman $82.5 million, loaned it $82.5 million and agreed to another $150 million in parts price increases. Collins & Aikman provides such components as cockpits, trim and carpet to nearly every vehicle built in North America.
The price increases, combined with $100 million in cost cuts, have the company poised to post $250 million in earnings in 2006 before interest, taxes, depreciation and amortization, Macher said. A slimmed-down Collins & Aikman expects to report revenue of about $2.5 billion in 2006 compared with a high-water mark of $4 billion in 2004.
Management is anxious to get out of Chapter 11, Macher said. The annual cost of administrative and professional bankruptcy fees is $100 million, he said. Debt service also is costing the company about $100 million annually. Collins & Aikman has total debt of about $1.91 billion.
With all new senior management in place, Collins & Aikman has developed an aggressive business plan for the next five years, Macher said. The company, he said, has proprietary products and processes -- such as an instrument panel that doesn't show the lines of the airbag housings -- which investors may find attractive.
Lear Corp. has a stake in what happens at Collins & Aikman. The seat maker would like to roll its North American interior trim business into a joint venture with Ross. But that would only happen if Ross buys Collins & Aikman.
Lear used that template this year when it agreed to contribute its European trim operations to a joint venture with Ross for a 34 percent stake in the business.
Lear's North American trim business, which posts about $2 billion in annual sales, is hemorrhaging cash. Last year it was isolated from the rest of Lear so it could be divested.
Lear COO Douglas DelGrosso said last week that Lear is confident that Ross will buy Collins & Aikman so the Lear joint venture can go forward.
He said Ross is well-positioned because he owns a big chunk of Collins & Aikman's bonds and debt. Ross owns 10 percent of a $150 million postbankruptcy financing and $50 million, or 6.7 percent, of Collins & Aikman's senior secured credit facility.
Collins & Aikman ranks No. 29 on the Automotive News list of the top 100 global suppliers with worldwide original-equipment automotive parts sales of $3.90 billion in 2004.
You may e-mail Dave Barkholz at [email protected]