Chassix Holdings Inc., a manufacturer of precision automotive castings, gained a federal bankruptcy court’s clearance to seek creditors’ approval for its pre-negotiated “restructuring and recapitalization” plan. The Southfield, MI-based group made its Chapter 11 filing in mid-March, noting at that time that its reorganization plan had approval from 80% of the unsecured bondholders and 71.5% of the senior secured bondholders, its existing sponsor, and all of its largest customers.
Chassix said then its plan — involving a debt-for-equity swap to reduce Chassix’ outstanding bond debt and debt payment obligations — would enhance its financial strength and position it to move forward as a global automotive supplier.
When it made the Chapter 11 filing, Chassix had assembled $250 million of debtor-in-possession financing to carry it through the bankruptcy process.
The bankruptcy court authorized Chassix to convert $375 million of secured notes and $158 million of unsecured notes into equity in a new company. Customers have agreed to give Chassix $45 million in annual price increases and new business, according to court papers.
Chassix was formed in 2013 by Platinum Equity LLC, which merged its Diversified Machine Inc. and SMW Automotive LLC holdings into a global precision casting and machining operation that now has 23 plants in the U.S., Brazil, China, France, Mexico, and Spain.
The operations cast ductile iron and aluminum, with a range of casting processes in use (e.g., PCPC, VRC, tilt pouring, squeeze casting, and green sand casting), and machining and assembly capabilities. Its cast products include numerous automotive chassis, brake, and powertrain parts,
Among Chassix’ customers are General Motors Co., Ford Motor Co., Chrysler Group LLC, Nissan North America and BMW AG, according to the bankruptcy court records.
“The court's authorization allows us to begin the solicitation of votes on our pre-negotiated plan and represents another positive milestone in Chassix’s restructuring process,” according to CEO Mark Allan, Chassix Chief Executive Officer.
Noting that bondholders, major shareholder, and “all of our largest customers” had already endorsed the restructuring plan, Allan expressed confidence that Chassix would emerge from Chapter 11 this summer.”
While eligible stakeholders must vote to approve the reorganization package, the court set a voting deadline of June 19 for eligible stakeholders. The plan also requires confirmation by the federal bankruptcy court.