Business Context and Reporting Period
Company: Cooper-Standard Holdings Inc.
Filing Type: Form 8-K (Current Report)
Date: May 24, 2010
Event: Confirmation of Chapter 11 Plan of Reorganization and anticipated emergence from bankruptcy protection.
The Company and its subsidiaries filed for Chapter 11 relief on August 3, 2009. On May 12, 2010, the Bankruptcy Court confirmed the Second Amended Plan of Reorganization. The Company expects to emerge from Chapter 11 protection on or about May 27, 2010 (the "Effective Date").
Key Financial Metrics and Capital Structure
Debt Reduction: The Company will emerge with approximately $480 million in funded debt, representing a reduction of over $650 million from pre-petition levels.
Exit Financing and Liquidity:
- Equity Raised: $355 million via a Rights Offering and direct purchases by Backstop Parties.
- New Senior Notes: $450 million aggregate principal amount of 8.5% Senior Notes due 2018 (funded into escrow).
- Working Capital: New facility of $125 million, including an uncommitted $25 million accordion feature.
Equity Issuance (Effective Date):
- New Common Stock: 17,490,533 shares issued and outstanding.
- New Preferred Stock: 1,000,000 shares issued and outstanding.
- New Warrants: 2,419,753 warrants issued.
Financial Statements: Specific revenue, profit, cash flow, and margin data for the reporting period are not provided in this filing. Investors are referred to the unaudited consolidated financial statements in the Form 10-Q for the quarter ended March 31, 2010.
Material Changes and Plan Terms
Creditor Treatment:
- Prepetition Credit Facility & General Unsecured Claims: To be paid in full in cash on the Effective Date.
- Senior Note Claims: Paid in full in cash, except for Supporting Senior Note Claims, which receive 4,563,095 shares of New Common Stock.
- Senior Subordinated Note Claims: Receive 1,742,222 shares of New Common Stock, warrants for 725,926 shares, and rights to purchase 8,623,491 additional shares.
- Existing Equity: All existing common stock is cancelled; holders receive no distribution.
Management Incentives: A new plan reserves 10% of New Capital Stock for issuance to management.
Guidance, Outlook, and Risks
Outlook: The Company anticipates emergence from bankruptcy on May 27, 2010, subject to the satisfaction of conditions in Section 13.02 of the Plan.
Risks and Contingencies:
- Emergence is contingent upon the completion of conditions set forth in the Plan.
- Proceeds from the New Notes are held in escrow until conditions are satisfied.
- The "accordion" feature of the working capital facility is uncommitted and requires lender consent.
Investor Verification Checklist
- Verify the satisfaction of conditions in Section 13.02 of the Plan to confirm the May 27, 2010 emergence date.
- Review the Form 10-Q filed May 17, 2010, for the most recent asset and liability data.
- Confirm the release of the $450 million New Notes from escrow upon emergence.
- Monitor the utilization of the new $125 million working capital facility.
- Assess the dilution impact of the 17.5 million new common shares and associated warrants.