American Tire Distributor reached an agreement with a majority of its term loan holders to support its restructuring support agreement, which would reduce the company’s debt by approximately $1.1 billion and increase its financial flexibility as it continues its ongoing transformation.
The agreement results in the support of all three categories of the company’s debt holders.
“We are pleased to have the support of our term loan lenders for our previously announced restructuring support agreement, which will help to facilitate a fully consensual court-supervised process,” said Stuart Schuette, CEO of ATD. “The strong support by our key financial stakeholders for our recapitalization plan represents an important vote of confidence in our business and our future. We intend to move quickly through this court-supervised process and continue our ongoing transformation to lead change in our industry.
Under the terms of the agreement, which is subject to court approval and final documentation, the term loan lenders will, among other things:
- Provide half of the $250 million in new financing to support ATD’s continuing operations
- Extend the maturity of the term loan facility by three years
- Participate in exit financing upon ATD’s completion of the court-supervised process
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According to the first day motions filed with the ban U.S. Bankruptcy Court, Bank of America serves as administrative agent for the DIP financing.
The company has received court approval of all of its key first day motions that will support the business. The approved motions give the company the authority to, among other things, enter into post-petition financing, continue to utilize its cash management system and continue to pay critical suppliers and vendors in full under pre-existing trade terms. The company intends to meet its obligations in the ordinary course and expects its operations to continue uninterrupted throughout the court-supervised process.
ATD has entered into a definitive agreement with approximately 75% of its bondholders on the terms of a recapitalization that would reduce the company’s debt by approximately $1.1 billion. To implement the definitive agreement, the company voluntarily filed for reorganization under Chapter 11 in the District of Delaware. ATD’s operations across its distribution network are continuing to serve customers without disruption as it moves through this process.
American Tire Distributors is one of the largest independent suppliers of tires to the replacement tire market.
