Meridian Automotive Systems hit the market last Tuesday for $175 million of exit financing from Deutsche Bank after a year-and-a-half in bankruptcy protection. The credit consists of a $70 million revolver and a $105 million first lien split into an $80 million term loan and a $25 million pre-funded letter of credit, according to a banker. Price talk is LIBOR plus 2 1/4% on the revolver and LIBOR plus 5 1/2% on the first lien. The deal also includes a second-lien tranche that will fall somewhere in the $80-98 million range that is being considered more of a junior term loan, the banker said. It could not be determined when the exact size would be finalized. Pricing on the second lien is LIBOR plus 8% of payment-in-kind.
"I think the deal is struggling a little bit. It's not an easy deal," said one portfolio manager, commenting on the auto sector. "I think there's some concern over longer-term viability of the deal." Another portfolio manager felt the same. "It's just coming out of bankruptcy why would you do a second tier?" he said, referring to the second lien. With all the auto names out there, "you do Ford and GM right now," he commented.
The auto part supplier has had a rough time since it filed for bankruptcy on April 26, 2005. Meridian planned to receive $375 million of debtor-in-possession financing from JPMorgan, but revisions to its 2005 operating forecasts caused by production cutbacks forced the deal to be shelved. The company worked with an interim $30 million DIP until securing a $75 million DIP from Credit Suisse. It could not be determined why Credit Suisse is not leading the exit financing. Meanwhile, over the summer, Meridian's existing paper continued to tumble, with its second lien finally bottoming out in the single digits after the company pulled its second plan of reorganization in August (CIN, 8/21).
Based in Allen Park, Mich., Meridian is a supplier of front and rear end modules, exterior thermoplastics and composites, lighting and interior systems to automobile and truck manufacturers. A company spokesman declined comment.