Dana Files Ch. 11

Dana Corp. is the latest automotive supplier to seek Chapter 11 bankruptcy protection, with a March filing in U.S. Bankruptcy Court for the Southern District of New York.

The filing applies to 40 of Dana's U.S. subsidiaries and does not include operations in other parts of the world, the company says.

Dana cites declining revenues resulting from reduced production at major customers Ford Motor Co. and General Motors Corp., along with increased raw material and energy prices, as reasons for the filing.

As of Sept. 30, 2005, the supplier reports total assets of about $7.9 billion and liabilities of approximately $4.7 billion, on a consolidated basis.

“The Chapter 11 process provides the company an opportunity to fix our business comprehensively — financially and operationally,” Dana Chairman and CEO Michael J. Burns says. “This will be fundamental change, not just incremental improvement.”

Dana says it has secured $1.45 billion in debtor-in-possession financing from Citigroup Inc., Bank of America N.A. and JP Morgan Chase & Co. to fund its operations through the restructuring.

Subject to court approval, the new credit line replaces Dana's $400 million revolving credit facility and $275 million receivables securitization facility, and will be used for normal working capital requirements, the company says.

Throughout the reorganization, the supplier plans to sell non-core businesses, close several facilities and shift production to countries with lower labor costs, Burns says.

Dana also will work to reduce costs, increase efficiency and enhance productivity, he says.

The Chapter 11 filing of Toledo, OH-based Dana, which employs about 45,000 people and once supplied parts for Ford's Model T, reportedly is the third-largest bankruptcy case in history, behind Delphi Corp. and Federal-Mogul Corp.