Hayes Lemmerz International emerged from bankruptcy with a $550 million credit, $250 million of notes and two new lead banks that arranged both transactions. The global supplier of automotive and commercial wheels, brakes and other components selected Citigroup and Lehman Brothers to lead the debt deals after receiving several proposals from a large number of potential financers, said James Yost, v.p. of finance and cfo. "We felt both of them were the best of the bunch," he noted of the two leads and their proposed financing packages. CIBC World Markets led the company's pre-petition debt and did not submit a proposal to lead the new deal, Yost added.
Hayes also considered the lead lenders' ability to do other non-loan product business with the company, confirmed Gary Findling, corporate treasurer. "[It's] one of the reasons we selected these guys," he said, noting that the company has already begun some European cash management business with Citi and is discussing possible hedging business with both Lehman and Citi. Findling noted that Lehman is an entirely new relationship for the company.
The credit includes a six-year, $450 million "B" loan, priced at LIBOR plus 43/4%. Yost said pricing on the tranche was originally proposed at LIBOR plus 4%, but market conditions at the time demanded a wider spread for the deal. The company had less control over the timing of the deal because it had to be completed in conjunction with Hayes' plans to emerge from bankruptcy, he added. Findling said 40 lenders signed on for the term loan. There is also a five-year, $100 million revolver priced at LIBOR plus 31/2%. Yost and Findling said the revolver is not yet tapped and Citi, Lehman and GE Capital are the three lenders to the tranche. The revolver was originally set for $125 million.
"Overall, we were very happy that Citi and Lehman were able to get us the package we needed," Yost said. He added that the company had worked out, after several discussions, an agreeable plan of reorganization with its creditors. "In any plan of reorganization, the issue is how much," Yost noted, describing the process of deciding payout to the company's lenders (LMW, 4/14). "I think during the time we were in Chapter 11, a lot of important things have happened," Yost also said, pointing to the Northville, Mich.-based company's new senior management team and significantly improved earnings results since 2001.