DETROIT -- Hayes Lemmerz International Inc. filed for Chapter 11 bankruptcy protection last week, its second Chapter 11 filing this decade.
The suburban Detroit supplier of steel and aluminum wheels is the sixth significant auto supplier to seek court protection this year, compared with eight in all of 2008.
Hayes Lemmerz is asking the court to approve a debtor-in-possession loan to fund the company's operations in bankruptcy with $100 million in additional liquidity.
Some of the company's current secured lenders would provide the loan and then would own roughly all of the supplier's equity if Hayes Lemmerz emerges from Chapter 11 protection. It emerged from its first Chapter 11 in 2003.
The debtor-in-possession lenders are part of a larger group that holds a majority of the company's secured debt and has agreed to reduce the company's debt load.
The common stock of Hayes Lemmerz will be canceled, and bondholders will receive little, if any, return as the bonds could be canceled, according to a court statement by CFO Mark Brebberman.
Hayes Lemmerz reported $1.3 billion in assets and $1.4 billion in liabilities.
In a statement, CEO Curtis Clawson said the company expects to continue day-to-day operations and for there to be no supply chain disruptions because of the filing.
"I want to personally assure our customers, suppliers and employees that we will continue to focus on being a premier automotive supplier by satisfying customers, being a low-cost producer and having the best people," Clawson said in the statement.
The recession, a drop in vehicle production and tightening credit were cited as causes of the Hayes Lemmerz filing, according to Brebberman's statement.
The company saw revenue drop to $1.9 billion in its 2008 fiscal year, which ended Jan. 31, from $2.1 billion in its 2007 fiscal year. Revenue in the 2008 fiscal fourth quarter fell 49 percent compared with to the same period the previous year.
As revenue slowed in the fourth quarter and continued into 2009, Hayes Lemmerz had fully tapped its $125 million revolving credit line by the end of January, according to Brebberman's court statement.
The company also saw its receivables securitization facility, which allows it to borrow against parts shipped to automakers, restricted from its normal $25 million limit to $5 million last month.