Bankruptcy Court Confirms Hayes Lemmerz Reorganisation Plan

On November 3 Hayes Lemmerz International announced that the United States Bankruptcy Court for the District of Delaware has confirmed the proposed plan of reorganisation filed by the wheel manufacturer in July. Now that the go-ahead has been given, Hayes Lemmerz expresses confidence that the plan will significantly improve its balance sheet and reduce leverage. The company's total consolidated pre-petition funded debt of approximately US$720 million is now expected to shrink to approximately $240 million upon emergence from Chapter 11 bankruptcy.

Settlements have also been reached with its US based retirees, stated Hayes Lemmerz. This will, the company said, allow it to “significantly reduce the burden of its retiree medical liabilities in the United States.” In addition, Hayes Lemmerz has reached an agreement in principle with the Pension Benefit Guaranty Corporation that is expected to resolve the PBGC’s claims with respect to the company’s United States pension plan. Hayes Lemmerz’s legacy retiree medical and pension liabilities in the United States stood in excess of $250 million pre-petition and are now expected to be less than $75 million upon emergence from Chapter 11.

The court has, however, made the securing of exit financing an approval condition for its confirmation order. Hayes Lemmerz reports it is currently working with a number of potential lenders to structure exit financing of approximately $100 million, and now expects to finalise this financing and emerge from Chapter 11 no later than December.

“We appreciate the efforts of our pre-petition creditors in reaching agreements that enable us to significantly reduce our debt,” said company chairman and CEO Curtis J. Clawson. “We also appreciate the cooperation of the PBGC and the representatives of our retirees in reaching agreements that will allow us to substantially reduce our pension and retiree medical obligations in a manner that is fair and equitable to our valued retirees. We worked long and hard to achieve this important balance. We believe that we will emerge from Chapter 11 as a leaner, stronger competitor well positioned to continue our leadership in the global wheel market. Our customers and suppliers will not see any changes in our business following our emergence.”