DETROIT -- Meridian Automotive Systems Inc. said Tuesday, June 27, that it has reached agreements with its major creditors and plans to file an amended reorganization plan soon in U.S. Bankruptcy Court in Delaware.
"We are extremely pleased to have achieved a consensual plan supported by our major creditor constituencies," Meridian CEO Richard Newsted said in a statement. "This will enable us to emerge from Chapter 11 in a quick, uncontested and orderly manner."
The supplier of bumper systems, composites and exterior lighting filed its original plan of reorganization March 30, but it did not have the support of all of the company's creditors.
Meridian did not provide a timeline for emerging from bankruptcy. A company spokesman did not return three phone calls.
David Neier, a partner in Winston & Strawn LLP and an attorney representing Meridian's unsecured creditors, said the auto supplier could emerge from Chapter 11 by August or September. Meridian's plan first must be voted on by creditors and approved by a Bankruptcy Court judge.
"Now there has been a settlement with every important creditor constituency out there in the case," Neier said. "This case needed to get out of bankruptcy and go forward. This is a good company."
The automotive parts supplier filed for Chapter 11 bankruptcy protection in April 2005 after being hit by rapid price increases for steel and plastic, pricing pressures from customers and the declining market share of its customers.
Since then, Meridian has revamped its management, closed several plants, reduced its employee count and addressed pricing issues with customers, according to a statement the company filed with the court in May.
Meridian also moved its headquarters from Dearborn, Mich., to the nearby Detroit suburb of Allen Park in March, according to the company's statement.
Meridian plans to exit Chapter 11 by restructuring its balance sheet, paying some creditors in full and issuing new stock to satisfy the debts claimed by other creditors.
Cash to fund payments to creditors could come from the sale of Meridian's interiors division. The investment-banking firm Lazard Freres & Co. LLC has been marketing the interiors division, which encompasses two plants in Grand Rapids, Mich., and plants in Brantford, Ontario, and Muzquiz, Mexico.
However, Neier said a sale of the interiors division is not crucial for the reorganization plan to work.
Meridian also expects to gain $18.3 million from the sale of its Fowlerville, Mich., plant to First Industrial Acquisitions Inc. of Chicago, according to the company's plan of reorganization. Meridian plans to lease the plant and will continue to operate it.
Meridian's first reorganization plan was proposed by three investment funds that hold portions of Meridian's secured debt. These same funds will own a portion of the reorganized company. They are Camulos Master Fund LP, DK Acquisition Partners LP and Stanfield Capital Partners LLC.
Meridian ranks No. 51 on the Automotive News list of the top 150 suppliers to North America, with North American original-equipment sales of $1.0 billion in 2005. It employed about 5,400 people when it filed for bankruptcy. It is the sixth-largest North American supplier currently operating under Chapter 11 protection.
You may e-mail Brent Snavely at [email protected]