TSL Express Daily News
The Secured Lender
SFNet's 80th Annual Convention Issue
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October 24, 2024
Source: Yahoo Finance
American Tire Distributors (ATD) has commenced voluntary Chapter 11 proceedings in the US Bankruptcy Court for the District of Delaware.
The restructuring plan aims to transition ownership of the company while addressing significant debt obligations.
The company formally entered into a restructuring support agreement with a consortium of lenders, including Guggenheim Partners Investment Management, KKR, Monarch Alternative Capital, Sculptor Capital Management, and Silver Point Capital.
The lenders, collectively known as the Ad Hoc Lender Group, represent approximately 90% of ATD's outstanding obligations under its Term Loan.
The agreement with the lenders includes a competitive sale process to transition ownership of the company, with discussions ongoing regarding an asset purchase agreement.
To facilitate the restructuring and sale process, ATD has secured $250m in new financing from the Ad Hoc Lender Group and access to $1.2bn from lenders under the company’s prepetition ABL facility.
These funds, subject to court approval, along with cash from ongoing operations, are expected to provide sufficient liquidity to support the business during the restructuring.
Kirkland & Ellis, Moelis and Company, and AlixPartners are advising ATD on legal, investment banking, and restructuring matters, respectively.
The Ad Hoc Lender Group is advised by Akin Gump Strauss Hauer & Feld and Perella Weinberg Partners, while the ABL Lenders have engaged Otterbourg and PKF Clear Thinking.
ATD has filed customary "first-day" motions to maintain operations and uphold commitments to stakeholders, including associates, manufacturer partners, customers, and vendors.
ATD interim CEO Michael Feder said: "For nearly 90 years, ATD has continuously evolved to meet the dynamic shifts and challenges facing the auto aftermarket.
“Today, we are taking further steps to position ATD for our next phase as a stronger distribution partner to our manufacturers and customers as we return to our roots and hone our core value proposition as a wholesale distributor.
"We are confident that entering into this process with the support of the Ad Hoc Lender Group will enable ATD to execute its business strategy and achieve our long-term objectives," he added.
The company expects to receive court approval for these motions promptly and to pay for goods and services provided post-filing.
"American Tire Distributors enters Chapter 11 to restructure debt" was originally created and published by Just Auto, a GlobalData owned brand.