From Fleet Owner
Truck component supplier Dana Corp. has proposed a reorganization plan to help it exit Chapter 11 bankruptcy protection by the end of this year - contemplating, among other things, an investment of up to $750 million in new convertible preferred stock in the reorganized company.
The disclosure statement contains a discussion of the issues that led to the Chapter 11 filing, a description of the Plan provisions, and an analysis of the Plan's feasibility. With this filing, Dana is one step closer to achieving its goal of emerging from Chapter 11 protection by year’s end.
“When we entered Chapter 11 in March 2006, we committed to fixing our business comprehensively - financially and operationally - and to implementing fundamental change, not simply incremental improvement,” said Mike Burns, chairman & CEO. “We’ve made substantial progress in addressing our challenges and building a sustainable business that is well positioned to compete in a challenging global environment. We are on track to emerge as a stronger, financially stable company that is equipped to make significant investments in our programs and to continue providing innovative products … to our customers worldwide.”
Last November, Dana outlined five goals that it would address during its reorganization, identifying the key areas where it hoped to achieve a total of $405 million to $540 million in combined annual cost and margin improvement.
Those goals now form the backbone of Dana’s reorganization plan, said Burns, designed to achieve product profitability by:•Working with customers to resolve under-performing programs, including obtaining pricing adjustments to reflect rising material costs
•Consolidating high-cost manufacturing facilities and expanding presence in lower cost regions
•Reducing labor costs, including through changes in employee benefits
•Significantly reducing retiree health and welfare costs through Voluntary Employee Benefit Association (VEBA) trusts to provide replacement benefits
•Reviewing administrative costs at all levels of its organization to identify and implement savings.
Court approval for these actions are expected to result in approximately $440 million to $475 million in annual savings when fully implemented, Burns said.
Dana must now await the Court’s decision on its plan, which could be modified or changed and then must be approved by the company’s claim and equity holders, Burns noted.