A flurry of trading occurred after Meridian Automotive Systems declared bankruptcy last Tuesday. The $165 million second lien traded in the 76-78 context, while the $230 million first-lien traded around 98 3/4-99 1/4. The auto-parts maker will receive a $375 million debtor-in-possession financing from JPMorgan, subject to court approval. This will pay down the first lien, a trader said. At press time the court had approved $30 million of the DIP.
Last month Meridian's second lien traded up to 83 1/2 -85 1/2 after being quoted at 76 on rumors of a potential takeover by a financial sponsor (LMW, 4/4). A Meridian spokesman would not comment on speculation of a takeover. He said a creditor committee will be formed by the end of May to discuss a plan of reorganization.
Meridian needs to restructure its debt, which has become unsustainable due to the increases in steel and resin prices and the termination of early payment programs by original equipment manufactures.
Meridian's first and second-lien loans are priced at LIBOR plus 4 1/2% and LIBOR plus 9%. Credit Suisse First Boston leads the bank debt. Other auto-parts names that have filed for bankruptcy include Tower Automotive, Intermet Corp. and Citation Corp.