Cooper-Standard seen as Chapter 11 risk

ERJ staff report (CDB)

Detroit, Michigan -- Cooper-Standard Automotive Inc. was flagged by Standard & Poor's as a Tier 1 auto supplier facing a potential Chapter 11 filing.

The suburban Detroit supplier's parent company, Cooper-Standard Holdings, said it had skipped bond interest payments as it is working with lenders to boost liquidity and revamp its capital structure.

The skipped payment, while not yet considered a default, becomes a default if the company does not make the payment within a 30-day grace period.

But S&P voiced doubts.

"We are not confident that Cooper-Standard will make the payments within the grace period," S&P credit analyst Nancy Messer said in a statement. "The company might pursue a distressed exchange or file for bankruptcy under Chapter 11."

Cooper-Standard CEO James McElya said he does not expect the company's efforts to revamp its capital structure to affect its customer relationships or the company's ability to pay suppliers.

Other publicly traded suppliers have faced or are facing similar situations.

Visteon Corp. skipped a bond interest payment in February but made the payment within its 30-day grace period in early March. The company later filed Chapter 11.

Lear Corp. skipped a bond interest payment last week while it pursues a capital restructuring. The world's second-largest seat maker is facing a potential bankruptcy filing if it doesn't win concessions from lenders and debt holders.

So far in 2009, at least eight suppliers tracked by Automotive News, a sister publication of Rubber & Plastics News, have filed for bankruptcy. More than 60 have filed over the past decade. The count doesn't include many smaller suppliers.

Cooper-Standard ranks No. 38 on the Automotive News list of the top 150 suppliers to North America with sales to auto makers of $1.23 billion in 2008.

From Crain's Detroit Businesss (A Crain publication)