Troubled auto supplier Collins & Aikman Corp. has decided to sell its operations in whole or in parts rather than emerge from Chapter 11 bankruptcy protection as a stand-alone company.
Chief Executive Officer Frank Macher said the company made the decision in the wake of production cuts by Big Three customers.
Collins & Aikman, a supplier of plastic parts, interior components and fabrics, has been in Chapter 11 protection since May 2005. At least 36 U.S. auto parts suppliers have filed for bankruptcy since 1999, including eight this year.
Collins & Aikman's recent reorganization plan envisioned the supplier emerging from Chapter 11 as a stand-alone company, with creditors getting stock for the debt they hold.
But industry conditions have overtaken the plan, Macher said in Nov. 14 news release.
``The valiant and successful effort put forth by C&A's employees and restructuring team to stabilize operations must be commended,'' Macher said. ``However, industry conditions have continued to deteriorate to a point that we have determined it was absolutely necessary for us to pursue a cooperative sale process to provide the maximum value for our creditors and preserve the largest number of jobs.''
Spokesman David Youngman said a sale would yield a substantial recovery for secured lenders and creditors who loaned money during the bankruptcy.
He said a sale might be accelerated by talks that management has held with potential buyers. Billionaire investor Wilbur Ross has expressed an interest, for example, in buying some or all of C&A.
Parts of C&A are particularly attractive to buyers, Macher said during a conference last month in Dearborn, Mich. Those parts are the soft-trim operations, Canadian operations and a plant in Hermosillo, Mexico. Macher said at the conference that C&A might put itself up for sale.
The company's Hermosillo plant was in the news Oct. 13 when it stopped shipping parts to a nearby Ford Motor Co. assembly plant for one shift after a price dispute. Ford's Hermosillo plant builds the Ford Fusion, Mercury Milan and Lincoln MKZ sedans.
Collins & Aikman of Southfield, Mich., is No. 1 on Plastics News' most recent ranking of North American injection molders, with estimated 2005 relevant sales of $1.5 billion and total estimated sales of $3.8 billion.