Summary
- Marelli says 80% of lenders signed deal supporting its restructuring
- Says 100% of its secured debt would be eliminated
- Nissan says it is committed to supporting Marelli
TOKYO, (Reuters) – Nissan supplier Marelli Corp filed for Chapter 11 bankruptcy protection in the United States on Wednesday, the Japanese auto parts company said in a statement, after months of uncertainty about its talks with creditors.
The maker of car interiors and lighting, which is owned by private equity firm KKR, said it had secured a commitment of $1.1 billion in financing from its lenders, and that around 80% of the lenders had signed an agreement to support its restructuring.
“Throughout this process and moving forward, Marelli does not expect any operational impact from the Chapter 11 process,” it said in a statement.
Marelli said 100% of its secured debt would also be eliminated. Its total debt obligations amount to about $4.9 billion, according to Wednesday’s court filing.
The company’s situation has been closely watched given that it is a major supplier to Nissan, which is struggling to turn itself around.
Marelli said in the filing that the global trade war also affected its liquidity position due to the supplier’s import and export-focused business and the tariffs imposed on the automotive industry.
Marelli said the lenders of the new $1.1 billion financing will take ownership of the business once it emerges from Chapter 11, subject to a 45-day so-called “overbid process” in which other parties could bid for it.
The company listed both assets and liabilities in the range of $1 billion to $10 billion, according to the court filing.
The bankruptcy also breaks an impasse between Japanese lenders and the Ad Hoc Group of Senior Lenders, the two opposing bank groups holding a stake in Marelli’s loan facilities.
Mizuho Financial Group Japan’s third-largest bank and a member of the Japanese lenders’ group, said in a statement that its core unit had extended 237.6 billion yen ($1.64 billion) in lending to Marelli. It said it had already taken the necessary provisions and expected the impact on its earnings to be minimal. Mizuho said it would not be revising its consolidated earnings forecasts.
Kyodo News reported last week that Marelli was looking into Chapter 11 to ensure its operations would not be halted in the event that talks with creditors fell through.
“We appreciate Marelli’s efforts to minimise operational disruption,” Nissan said in a statement, adding it was committed to supporting Marelli and would coordinate with other Marelli customers and monitor the supply chain to prevent disruption.
Marelli was created in 2019 from the merger of Magneti Marelli and Japan’s Calsonic Kansei. Fiat Chrysler (FCA), now part of Stellantis sold Magneti Marelli to Calsonic Kansei, owned by KKR, for 5.8 billion euros ($6.66 billion).
Marelli put forward a restructuring plan that included a buyout by India’s Motherson Group, the Nikkei newspaper reported last month, adding that the proposal was unable to bridge the gap between Japanese and foreign creditors at the time.
($1 = 144.6800 yen)
($1 = 0.8709 euros)
Reporting by David Dolan in Tokyo and Rishabh Jaiswal, Additional reporting by Miho Uranaka and Aatreyee Dasgupta; Editing by Pooja Desai, Edwina Gibbs and Emelia Sithole-Matarise
Source: worldautoforum.com
