Dana Corporation announced that in order to address financial and operational challenges that have hampered its performance, the company and 40 of its U.S. subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code.
Dana's European, South American, Asia- Pacific, Canadian and Mexican subsidiaries are not included in the Chapter 11 filing and are operating as normal. The filings were made in the U.S. Bankruptcy Court for the Southern District of New York.
To fund its continuing operations during the restructuring, Dana has secured a $1.45 billion debtor-in-possession (DIP) financing facility from Citigroup, Bank of America, N.A., and JP Morgan Chase Bank, N.A. Subject to court approval, the DIP credit facility, which replaces the company's previous $400 million revolving credit facility and $275 million receivables securitization facility, will be used for the company's normal working capital requirements, including employee wages and benefits, supplier payments, and other operating expenses during the reorganization process.
Dana has faced a continued decline in revenues resulting from the decreasing market share and production levels of its largest domestic customers, along with sharp increases in commodity and energy prices that have outpaced the cost savings Dana has been able to achieve. The general financial condition of the industry, together with Dana's inability to renew or expand its credit facilities in a timely manner, has significantly constrained Dana's liquidity.
As a result, the company concluded, after thorough consultation with its advisors, that its interests and the interests of its creditors, employees, customers, suppliers, and the communities in which it operates would be best served by reorganizing under Chapter 11 of the U.S. Bankruptcy Code.
Dana Chairman and Chief Executive Officer Michael J. Burns said, "The Chapter 11 process provides the company an opportunity to fix our business comprehensively -- financially and operationally. This will be fundamental change, not just incremental improvement. The Chapter 11 process allows us to continue normal business operations, while we restructure our debt and other obligations and enhance performance.
"We want to assure everyone -- our customers, suppliers, our people and our communities -- that Dana is open for business as usual. And, to this end, our customers can continue to rely on Dana for quality products -- delivered on time and to best-in-class specification. This is an extremely difficult, but necessary and responsible decision that will provide us with the time and opportunity to strengthen our performance and achieve a sustained turnaround at Dana."
Mr. Burns said Dana intends to proceed with its previously announced divestiture and restructuring plans, which include the sale of several non- core businesses and the closure of several facilities and shift of production to lower-cost locations. In addition, Dana will continue to take steps to reduce costs, increase efficiency, and enhance productivity, he said.
More information about Dana's filings is available on the company's Web site at: http://www.dana.com/.