American Tire Reaches Deal With Senior Lenders, Lawyer Says
(Bloomberg) -- American Tire Distributors Inc., which sought court protection from creditors on Thursday, has reached an agreement with its senior lenders, the company’s lawyer Chad Husnick said in court Friday.
That means most creditors now back the restructuring proposal, including 75 percent of bondholders. Getting a deal with all of its major creditors will enable the company to exit bankruptcy, Husnick said.
A group of term loan lenders have agreed to the basic outline of a deal, but they have not yet signed a formal restructuring support agreement that would bind them to backing American Tire’s debt-cutting plan, said lawyer Brian Hermann, who represents those lenders. "It is an agreement only in principal," Hermann said in court. The lenders are likely to sign the deal by Tuesday, he said.
U.S. Bankruptcy Judge Kevin Carey gave the company interim approval to borrow $250 million and refinance part of a $980 million asset-backed credit facility the company had before it filed bankruptcy. American Tire must return to court in the next few weeks to make the borrowing authority permanent.
About three-quarters of the company’s bondholders have agreed to a plan that would give that class of creditors a 95 percent equity stake, American Tire said in a statement on Thursday. The senior lenders, who hold American Tire’s term loan, asked for "excessive value" in pre-bankruptcy talks, the company has said in court filings.
American Tire was hobbled earlier this year when the manufacturers of Goodyear and Bridgestone tires decided to deal directly with consumers through their own networks. In what the company’s chief financial officer described as an almost simultaneous blow, Sears Holdings Corp.’s auto centers agreed to install tires bought on Amazon.com. The company is owned by TPG Capital and Ares Management LP.
The case is ATD Corp., 18-12221, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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