Cooper Standard files for bankruptcy
By Steve Herring
Published in News on August 4, 2009 1:46 PM
It is expected to be "business as usual" for Goldsboro's two Cooper Standard Automotive plants as their parent company seeks to restructure its debt in federal bankruptcy court. The move could reduce the company's roughly $1.1 billion of bank and bond indebtedness to approximately $350 million.
In addition, the proposal contemplates financing of $100 million to $150 million as the company emerges from the bankruptcy court.
The two local plants that build door seals for the automotive industry employ approximately 330 workers. Annual payroll information was not available.
The company has been located in Wayne County since 1984 and has plants on Fedelon Trail and Woodland Church Road.
Calls to the local plant Monday afternoon were not returned.
"They have been an excellent industrial partner for the county," said Mike Haney, existing industry specialist for the Wayne County Development Alliance.
Haney said he does not yet know what effect the filing will have on the local plants.
"Everything we have read indicates it will be business as usual, and that is what we hope for," he said. "They have been great for Wayne County, and we hope they can rebound as a company and grow in Wayne County and Goldsboro. We will be there when the opportunity comes."
What the company is going through is something Haney said he has seen before with other companies.
"Hopefully it will be OK, but we just don't know," he said. "It has been a rough year."
County officials expressed surprise and said they could not comment until they had more information.
The company filed a variety of customary first-day motions with the U.S. Bankruptcy Court in Delaware to enable it to continue what company officials called "business as usual" during the restructuring, including requests to continue paying employee wages and benefits as usual.
Parent company Cooper Standard Holdings Inc. Monday announced that Cooper Standard and its U.S subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code to facilitate a balance sheet restructuring.
According to the company's Web site, its net sales for 2008 increased to $2.59 billion, compared to $2.51 billion in 2007, an increase of $83.4 million. However, gross profit for 2008 was $334.5 million, or 12.9 percent of sales, as compared to $397.1 million, or 15.8 percent of sales, in 2007.
According to the site, the decrease is primarily the result of reduced North American volume, unfavorable mix and higher raw material prices. For the quarter, gross profit was $34.9 million compared to $113.4 million for the same quarter of 2007.
Operating profit in 2008 was $0.1 million compared to $29.6 million reported in 2007.
The balance sheet restructuring follows an operational restructuring implemented in March that has enabled the company to realize $47 million in annual savings.
According to a press release on the company's Web site, it has negotiated with its lenders and other constituents regarding the "consensual restructuring plan."
"Restructuring the company's balance sheet to align with the new automotive marketplace is the right decision at the right time," said James S. McElya, chairman and chief executive officer of Cooper Standard. "Today's action will allow the company to maintain its leadership position in the industry, preserve its business relationships and continue providing innovative technology to our customers. We expect to emerge from Chapter 11 a much stronger and more competitive company."
Some of the company's current lenders have agreed to provide it with up to $175 million in debtor-in-possession (DIP) financing. The DIP financing is subject to approval of the U.S. and Canadian bankruptcy courts.
The company will use the funds, along with its current cash balance and future cash flow, to formulate and implement a restructuring plan and pay normal operating expenses, including employee wages and payments to suppliers.
The company intends to continue operating "business as usual" during the reorganization process and anticipates no interruption in its supply to customers.
Monday's filings include all wholly-owned U.S. and Canada operations.
Cooper Standard Auto-motive Inc., headquartered in Novi, Mich., is a leading global automotive supplier specializing in the manufacture and marketing of systems and components for the automotive industry.
Products include body sealing systems, fluid handling systems and NVH control systems, which are represented within the company's two operating divisions, North America and International. Cooper Standard Automotive employs about 16,000 people globally with more than 70 facilities throughout the world.