By David Barkholz, Automotive News
Detroit, Illinois-Troubled auto supplier Collins & Aikman Corp. has decided to sell its operations in whole or in parts rather than emerge from Chapter 11 reorganisation as a stand-alone company.
CEO Frank Macher said the company made the decision in the wake of production cuts by Detroit 3 customers.
Collins & Aikman, a supplier of plastic parts, interior components and fabrics, has been in Chapter 11 since May 2005. At least 36 US auto parts suppliers have filed for bankruptcy since 1999, including eight this year.
Collins & Aikman's recent reorganisation plan envisaged the supplier emerging from Chapter 11 as a stand-alone company, with creditors getting stock for the debt they hold.
But industry conditions have overtaken the plan, Macher said in a release today.
"The valiant and successful effort put forth by C&A's employees and restructuring team to stabilize operations must be commended," Macher said. "However, industry conditions have continued to deteriorate to a point that we have determined it was absolutely necessary for us to pursue a cooperative sale process to provide the maximum value for our creditors and preserve the largest number of jobs."
Spokesman David Youngman said the sale would yield a substantial recovery for secured lenders and creditors who loaned money during the bankruptcy.
He said a sale might be accelerated by talks that management has consistently held with potential buyers. Billionaire investor Wilbur Ross has expressed an interest, for example, in buying some or all of Collins & Aikman.
There are parts of Collins & Aikman that are particularly attractive to buyers, Macher said during a conference last month in Dearborn, Michigan. Those parts are the soft-trim operations, Canadian operations and a plant in Hermosillo, Mexico. Macher said at the conference that Collins & Aikman might put itself up for sale rather than try to emerge as a stand-alone company.
The company's Hermosillo plant was in the news 13 Oct when it stopped shipping parts to a nearby Ford Motor Co. assembly plant for one shift after a price dispute. Ford's Hermosillo plant builds the Ford Fusion, Mercury Milan and Lincoln MKZ sedans.
Collins & Aikman, of Southfield, Michigan, ranks No. 54 on the Automotive News list of the top 100 global suppliers with original-equipment automotive parts sales of $2800 million in 2005. "