Marelli initiates Chapter 11 proceedings and obtains $1.1bn in new funding
Some 80 per cent of the company's lenders, the group announced in a note, have signed an agreement to support the restructuring, which will reduce Marelli's leverage and strengthen its liquidity position
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Marelli Holdings has filed a voluntary Chapter 11 proceeding in the US Bankruptcy Court for the District of Delaware with the aim of fully restructuring its long-term debt obligations. Approximately 80% of the company's lenders, the company announced, signed an agreement to support the restructuring, which will reduce Marelli's leverage and strengthen its liquidity position. A commitment of $1.1 billion was obtained. Marelli 'does not expect any operational impact' from the bankruptcy process and 'the company will continue to work closely with its customers, suppliers and partners,' a group note explained.
CEO Slump: aim to strengthen the balance sheet by converting debt into equity
In addition to the 1.1 billion financing, the restructuring support agreement includes a comprehensive deleveraging transaction through which the lenders will assume ownership of the company upon its exit from Chapter 11. "At Marelli, we have been proactive in making the necessary adjustments to stabilise our financial position so that we can continue to provide long-term benefits to our valued customers, partners and employees," says David Slump, president and ceo of Marelli.
"We are pleased with our recent progress and profitability, but industry-wide market pressures have created a working capital shortage that needs to be addressed. After careful consideration of the company's strategic alternatives, we have decided that entering the Chapter 11 process is the best way to strengthen Marelli's balance sheet by converting debt to equity, while ensuring that we continue to operate as usual." The bankruptcy process, Slump explained, "provides access to new liquidity to fund our long-term growth and innovation pipeline, and ensures that our customers and partners around the world can continue to rely on Marelli to deliver on time the advanced technologies that shape the vehicles of the future.
The failed takeover by the Indian Motherson Group
.Marelli was born in 2019 from the merger of Magneti Marelli and Japan's Calsonic Kansei. Fiat Chrysler (FCA), now part of Stellantis, sold Magneti Marelli to KKR-owned Calsonic Kansei for EUR 5.8 billion (USD 6.6 billion).
Marelli had presented a restructuring plan involving a takeover by the Indian Motherson group, the Nikkei newspaper reported last month, adding that the proposal was unable to bridge the gap between Japanese and foreign creditors.
