Accuride Corporation, the Indiana-based manufacturer of heavy and medium-duty wheels, filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware on October 8, 2009. According to Accuride’s Declaration in Support of First Day Motions, the company filed for bankruptcy in order to reduce its debt through confirmation of a pre-arranged restructuring plan. Specifically, Accuride seeks approval of a plan of reorganization that (i) extends the maturity date on its loans to 2013; (ii) cancels notes in exchange for 98% of the common stock of reorganized Accuride; (iii) offers new senior secured notes worth $140 million; and, (iv) provides current stockholders with 2% of the stock issued for reorganized Accuride.
Accuride and Accuride Canada were formed in 1986 for the purpose of acquiring all of the assets of a division of Firestone. Two years after formation, Phelps Dodge Corporation purchased Accuride. One year after Phelps’ purchase, Kohlberg Kravis Roberts & Co. acquired a controlling interest in Accuride. As stated in Accuride’s Bankruptcy Declaration, Accuride’s stock originally traded on the New York Stock Exchange, however, it was subsequently delisted and now trades in the over-the-counter market.
The Company’s Financials
In its Petition for Bankruptcy, Accuride lists its assets at $682 million, against liabilities of $847 million. Accuride’s sales reached $1.4 billion in 2006, however, by 2008 sales were down to $931 million. The company’s senior credit facility includes a term loan with a balance of $303 million and a revolving credit facility with a principal balance of $100 million. In addition to its credit facility, the company issued notes worth $275 million. According to Accuride’s Petition for Bankruptcy, its ten largest unsecured trade creditors are as follows:
- Matalco Inc. … $1.1 million
- Joseph Tryerson … $804,609
- Ryerson … $791,756
- Gallatin Steel … $557,663
- American Colloid … $323,409
- PrimeTrade Inc. … $321,506
- Anixter Fasteners … $248,044
- Foseco Metallurgical $236,594
- Hydro Aluminum $230,801
- B&B Metals Processing … $228,683
Events Leading to Bankruptcy
Accuride is one of several auto parts suppliers that filed for bankruptcy in recent months. As with other parts manufacturers, Accuride attributes it bankruptcy filing to the global economic downturn. In its Bankruptcy Declaration, Accuride cites an industry publication that reports a drop in demand for trucking vehicles by 23% in the first half of 2007. Forecasts predict further declines for 2009. Given the poor economic outlook for the last three years, Accuride’s stock price fell from $16.91 in 2007 to $.36 per share at the time it filed for bankruptcy.
This bankruptcy proceeding is before the Honorable Brendan L. Shannon.