Dana Corporation has announced the company and its debtor subsidiaries have submitted a proposed ‘Plan of Reorganisation and related Disclosure Statement to the United States Bankruptcy Court for the Southern District of New York.
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The Plan of Reorganisation outlines how Dana proposes to emerge from Chapter 11, including the proposed treatment of creditors and equity holders.
The plan contemplates an investment of up to USD750m in new convertible preferred stock in the reorganised Dana. The Disclosure Statement contains a discussion of the issues that led to the Chapter 11 filing, a description of the plan provisions, and an analysis of the plan’s feasibility.
Dana says it is now ‘one step closer’ to achieving its goal of emerging from Chapter 11 protection by the end of this year.
Dana Chairman and Chief Executive Officer Mike Burns said, “When we entered Chapter 11 in March 2006, we committed to fixing our business comprehensively — financially and operationally — and to implementing fundamental change, not simply incremental improvement. As detailed in our Disclosure Statement, Dana has made substantial progress in addressing our challenges and building a sustainable business that is well positioned to compete in a challenging global environment. We are on track to emerge as a stronger, financially stable company that is equipped to make significant investments in our programs and to continue providing innovative products of the highest quality to our customers worldwide.
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By GlobalData“This has been a very difficult period for all of our constituencies, including our people — both current and retired — and our customers and suppliers,” he said. “I’d like to thank them for their perseverance to date, which has enabled us to negotiate and begin to implement critical, enduring solutions to our most serious challenges. We look forward to continued productive working relationships as we move through the plan negotiation and approval process.”
In November 2006, Dana outlined five goals that it would address during its reorganisation, identifying the key areas where it hoped to achieve a total of USD405m to USD540m in combined annual cost and margin improvement.
As outlined in the Disclosure Statement, Dana says it has worked to achieve product profitability by:
- Working with customers to resolve under-performing programs, including obtaining pricing adjustments to reflect rising material costs;
- Optimising its manufacturing footprint by consolidating high-cost facilities and expanding its presence in lower cost regions;
- Reducing labor costs, including through changes in employee benefits;
- Significantly reducing retiree health and welfare costs through Voluntary Employee Benefit Association (VEBA) trusts to provide replacement benefits; and
- Reviewing administrative costs at all levels of its organisation to identify and implement savings.
In total, since entering bankruptcy on March 3, 2006, Dana and its constituents have identified, agreed upon, and won court approval for actions that are expected to result in a total of between approximately USD440m and USD475m in annual savings when fully implemented, Dana says.
