Marelli Holdings have commenced voluntary chapter 11 bankruptcy, with the aim of comprehensively restructuring their long-term debt obligations. about 80 per cent of the company’s lenders have signed an agreement to support the restructuring, which will de-leverage Marelli’s balance sheet and strengthen their liquidity.
Marelli don’t expect any operational impact from the bankruptcy process, and will continue to work closely with customers, suppliers, and partners to innovate and invest in their technology portfolio.
CEO David Slump says, “We have been proactive in making necessary adjustments to stabilize our financial position so that we can continue to deliver long-term benefits for our valued customers, partners and employees. While we are pleased with our recent progress and profitability, industry-wide market pressures have created a gap in working capital that must be addressed. After careful review of the Company’s strategic alternatives, we have determined that entering the chapter 11 process is the best path to strengthen Marelli’s balance sheet by converting debt to equity, while ensuring we continue operating as usual. Taking this action now provides access to new liquidity to fund our long-term growth and innovation pipeline, and ensures our customers and partners all over the world can continue to rely on Marelli (…) we will continue to serve our customers and work with our suppliers and partners as they have come to expect.”
To support the company during this process, Marelli have received a commitment for $1.1bn in debtor-in-possession financing from their lenders. Upon court approval, the financing, along with cash generated from the company’s ongoing operations, is expected to provide sufficient liquidity to support the company through the bankruptcy process. The restructuring support agreement provides for a comprehensive de-leveraging transaction through which the lenders will take ownership of the business upon its emergence from bankruptcy.
Marelli filed a number of customary first-day motions seeking court approval to continue operations throughout the bankruptcy process, including uninterrupted payment of employee wages and benefits and continuation of programs integral to customer relationships. Marelli will be working with their suppliers to reach agreements on payment terms for obligations which arose before the bankruptcy filing.
