Lenders Syndicate Lear DIP
July 2, 2009
Lear Corp., a Southfield, Mich.-based automotive parts supplier, is gearing up to file for bankruptcy, and its lenders have syndicated a $500 million debtor-in-possession loan for the company.
The DIP, which was underwritten by JPMorgan and Citigroup, was syndicated at Libor plus 1,000 bps, with an OID of 95 and a 3.5% Libor floor. It will be converted into exit financing with a three-year term when Lear emerges from bankruptcy protection.
Lear has a $1 billion term loan outstanding, which it will not roll up with the DIP.
Standard & Poor's lowered its rating on Lear’s term loan to D from CC and the rating on the remaining senior unsecured debt to D from C. Last month, S&P lowered the company’s corporate rating to D from CCC+ after the company missed a $38 million interest payment on two of its bonds. The bonds consist of $300 million in 8.5% senior notes due 2013 and $600 million in 8.75% notes due 2016.
Lear, like the majority of the automotive industry, has been hit hard by the recession. The company has suffered because of steep production cuts by General Motors and Ford. Lear breached its loan covenants at the end of 2008 and then drew down its entire $1.3 billion revolver in January.
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