This week's press and industry previews at the North American International Auto Show in Detroit will give Meridian Automotive Systems Inc. a chance to tout itself as something that has become a rare commodity in Detroit - a company newly emerged from bankruptcy.
The Allen Park, Mich., company successfully brought itself out from Chapter 11 protection Dec. 29, some 20 months after it first sought protection with U.S. Bankruptcy Court in Wilmington, Del.
The move makes Meridian one of the few auto suppliers in recent years that has managed to emerge from bankruptcy as nearly the same company it was when it went in, with the biggest change in its improved bottom line.
``The fact is, we're much stronger than we've ever been,'' said Fran LeVeque, chief commercial officer. ``Meridian was created through a series of heavily leveraged acquisitions. Now we're deleveraged.''
Meridian had $600 million in total debt when it entered bankruptcy in April 2005. With a debt-to-equity swap, the company left bankruptcy with a $167 million exit loan from Deutsche Bank.
Meridian, which molds a range of thermoplastics and thermosets, and processes metal, maintained 85 percent of its jobs throughout the Chapter 11 process. It also kept its full list of products, including front- and rear-end modules, bumper fascia, lighting and interior trim, and launched a plant in Fowlerville, Mich., while under court protection.
While Meridian worked on re-emerging from bankruptcy, other, bigger auto suppliers followed the firm into protection, including Collins & Aikman Corp., Dura Automotive Systems Inc., Dana Corp. and the biggest North American auto supplier, Delphi Corp.
Since it is now out of court protection - and without the high level of debt that has put other firms at risk - Meridian should have more bargaining leverage in seeking future contracts, LeVeque said.
``What everyone is looking for is a low-risk supplier in terms of high quality and high innovation and strong delivery,'' he said. ``If you can develop and take to launch a new product, that's something important.''
The bankruptcy process took longer than expected, executives admitted. The company first hoped to emerge by the end of 2005. It had to revise its exit plans three times to adjust to changes in the company's outlook as the U.S. auto industry cut back production.
``There were a couple of false starts, but each time we went back it was because it was a question of industry situations that were changing,'' LeVeque said. ``It got to the point where speed for speed's sake wasn't the right thing. It had to be the right plan.''