SOUTHFIELD, Mich., April 20 /PRNewswire-FirstCall/ -- Collins & Aikman Corporation (CKCRQ) announced today that it has signed an asset purchase agreement (Agreement) with International Automotive Components Group North America Inc. (IAC NA) for the sale of the Company's North American automotive flooring and acoustic components business. The Company will file a motion seeking approval of the Agreement subject to higher or better offers through a bankruptcy court-monitored auction process. The Agreement provides for aggregate consideration to the Company of $134 million in cash, plus certain contingent consideration and certain assumed liabilities. The Agreement also provides an opportunity for the Company's senior, secured prepetition lenders to invest in IAC NA's parent company up to an aggregate cap of 25% of IAC NA's outstanding stock. The Company has asked the Bankruptcy Court for a hearing on April 24, 2007 on the bidding procedures relief in the motion and a hearing to approve the results of the auction on May 24, 2007.
"The sale of our Soft Trim business is one of the most important elements of our efforts to maximize creditor recoveries and preserve jobs for Collins & Aikman employees," said John Boken, Collins & Aikman's Chief Restructuring Officer. "Our Soft Trim management team has done an outstanding job of operating this portion of our business throughout the many facets of these bankruptcy proceedings. We look forward to completing due diligence and closing this transaction as expeditiously as possible so that our Soft Trim team can continue to prosper and grow as a market leader in flooring and acoustics under new ownership."
The Soft Trim business covered in the Agreement includes 16 facilities in the United States, Canada and Mexico, employs approximately 4,300 people and produces products for all major automakers. Under the terms of the Agreement, consummation of the sale is subject to several conditions and termination rights of the parties.
The Company remains committed to providing updates to all interested parties on these matters and other significant sales transactions when appropriate and as they become available.
Collins & Aikman Corporation is a leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, plastic-based trim, and convertible top systems. The Company is headquartered in Southfield, Michigan. Additional information about Collins & Aikman, the Plan of Reorganization, the Disclosure Statement, and any exhibits, when filed, will be available on the Internet at http://www.collinsaikman.com/.
Cautionary Statement Concerning Forward-Looking Information
The foregoing statements regarding asset purchase agreement and the sale transaction constitute "forward-looking" statements, as that term is defined by the federal securities laws. You can find many of these statements by looking for words such as "may," "will," "expect," "anticipate," "believe," "estimate," "should," "continue," "predict," "preliminary," "potential" and similar words used herein. These forward-looking statements are intended to be subject to the safe harbor protection provided by the federal securities laws. These forward-looking statements are subject to numerous assumptions, risks and uncertainties. Because the statements are subject to risks and uncertainties, actual developments and results may differ materially from those expressed or implied by the forward-looking statements. Readers are cautioned not to place undue reliance on the statements, which speak only as of the date hereof. Additionally, the letter of intent identified in this press release is nonbinding and subject to numerous conditions such as completion of due diligence and negotiation of a definitive agreement.
Various factors that may affect actual outcomes and performance and results include, but are not limited to, the parties' ability to satisfy all of the conditions to consummation of the sale, including, satisfaction of due diligence, negotiation of agreements with customers and unions and shareholder approvals; our ability to obtain bankruptcy court approval of the agreement; general economic conditions in the markets in which the Company operates, declines in North American, South American and European automobile and light truck builds; labor costs and strikes at the Company's major customers and at the Company's facilities; fluctuations in the production of vehicles for which we are a supplier; changes in the popularity of particular car models, particular interior trim packages or the loss of programs on particular vehicle models; dependence on significant automotive customers; the level of competition in the automotive supply industry and pricing pressure from automotive customers; risks associated with conducting business in foreign countries; and increases in the price of certain raw materials, including resins and other petroleum-based products. In addition, the following may have a material impact on actual outcomes and performance and results: the results of the pending investigation; the change in leadership at the Company, the Company's ability to maintain access to its receivables facility and other financing arrangements, the Company's ability to otherwise maintain satisfactory relations with its creditors, suppliers, customers and creditors; the Company's ability to maintain current trade credit terms and manage its cash and liquidity, the Company's high leverage and ability to service its debt; and the impact of defaults under its material agreements and debt instruments.
The cautionary statements set forth above should be considered in connection with any subsequent written or oral forward-looking statements that the Company or persons acting on its behalf may issue. The Company does not undertake any obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.
On May 17, 2005, Collins & Aikman Corporation and 37 of its U.S. subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Eastern District of Michigan. Collins & Aikman's affiliates outside the United States were not included in the Chapter 11 filing.
