Oxford Automotive is seeking waivers from Silver Point Finance, which is limiting the auto supplier from using its three-year, $60 million revolver, which closed last November. The senior lenders limited access after the company announced it is restating financial statements following accounting errors, according to Standard & Poor's Analyst Nancy Messer. Robert Krakowiak, v.p. and treasurer of Oxford Automotive, did not return calls. Officials at SilverPoint, an arm of SilverPoint Capital, declined comment.
Importantly, the company is not generating free cash flow and its EBITDA will likely fall short of prior expectations for both March fiscal years 2004 and 2005, according to Messer. Last November, Jefferies & Co. underwrote $280 million in seven-year bonds for Oxford Automotive. Equity sponsor MatlinPatterson Global Opportunities Partner invested $75 million of equity, while SilverPoint provided the revolver.
"They are a single-B company coming out of bankruptcty," said Messer, underlining that liquidity has always been tight. But capital spending will be significant over the next six months to prepare for the launch of the new Mercedes M-Class and Grand Sports Tourer launches, she explained. Oxford has a $61 million cash balance, but some of this cash is in European subsidiaries, so it cannot be immediately accessed.