Wheel maker Hayes Lemmerz emerges from bankruptcy

ERJ staff report (AN)

WILMINGTON, Del. (Reuters) -- Automotive wheel maker Hayes Lemmerz International Inc. emerged from Chapter 11 bankruptcy on Monday after slashing debt and costs to better match declines in auto production.

The Northville, Michigan-based company emerged with $240 million in debt, down from the $720 million it had when it filed for bankruptcy in May.

The company also sought bankruptcy protection in 2001 and emerged from that filing in 2003. Hayes Lemmerz plans to diversify its operations globally to lessen its reliance on the United States.

It also has said it expects deep cost cuts to help withstand a steep decline in global auto production that has halved the company's sales. North American vehicle output has plunged 33 percent this year.

The company's bankruptcy plan transferred 84.5 percent of post-bankruptcy equity to lenders that provided the company's debtor-in-possession financing, which funded its operations in bankruptcy.

The rest of the company's equity will be divided among secured lenders, bondholders and the Pension Benefit Guaranty Corp, a government agency.

The PBGC became the trustee of the company's defined benefit pension plan and its approximately 4,700 participants, which the agency said was underfunded by $106 million.

Hayes said it will emerge with less than $75 million in pension and retiree medical liabilities.

Hayes reached a deal in October with unions and retirees to cut health insurance benefits for more than 2,000 families of former staff.

From Automotive News (A Crain publication)