Lear Lines Up $500 Million DIP
June 29, 2009
Lear Corp., a Southfield, Mich.-based automotive parts supplier, has lined up a $500 million debtor-in-possession loan from JPMorgan and Citigroup as part of a prepackaged bankruptcy.
The company is expected to file for bankruptcy before Tuesday, when a $38 million interest payment on two of its bonds is due. 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.
On June 2, Standard & Poor’s downgraded Lear’s rating to D from CCC+, after the company missed its initial payment on the bonds.
Bondholders are estimated to recover zero to 10 cents on their investment, according to KDP Investment Advisors.
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