American Axle restructures debt, gets help from GM
DETROIT — American Axle & Manufacturing Holdings Inc. said Thursday that it reached a deal to restructure its debt and received millions in financial help from General Motors, likely preventing a bankruptcy protection filing at struggling auto supplier.
According to a filing with the Securities and Exchange Commission, American Axle will be required to maintain a daily average of $85 million in liquidity until June 10 under the agreement with its lenders. The deal also limits the Detroit-based company’s ability to make certain kinds of investments, pay dividends, incur more debt and buy or sell assets.
In connection with the agreement, American Axle received a $110 million payment from GM related to contracts predating the automaker’s June 1 Chapter 11 filing. The Detroit-based automaker also will extend a loan to American Axle of up to $100 million.
In exchange, American Axle issued 4.1 million warrants to GM that entitle the automaker to buy the same number of American Axle shares at a price of $2.76 each. The supplier also agreed to issue GM up to 6.9 million more warrants to buy stock at that price based on how much it draws from GM’s loan.
GM also agreed to not acquire more than a 20 percent of American Axle’s outstanding stock without the company’s consent.
The deal with GM was struck earlier this summer but had been contingent on the supplier reaching a deal with its lenders.
Many industry observers had speculated that American Axle would have been forced to file for bankruptcy protection without financial help from GM, which remains its largest customer.
American Axle also said in Thursday’s filing that it expects to post a profit for the third-quarter and for its sales to total about $400 million.
Analysts polled by Thomson Reuters expect a third-quarter loss of 32 cents per share on $415 million in sales.
It added that it currently has enough cash to remain in operation and meet its upcoming financial operations.
As of Sept. 30, American Axle said it expects to have more than $300 million of liquidity including cash, short-term investments and committed borrowing capacity under its U.S. credit facilities including the loan from GM.
American Axle shares fell 49 cents, or 6 percent, to $7.64 in morning trading after hitting a 52-week high of $8.89 shortly after the market opened.
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