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A beautiful model, Dinah lands an ad campaign for meat. Soon afterward, while shooting a TV commercial, she falls for a studly stunt man - Steve. When they run off together, the advertising executives see the loss as an opportunity... |
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El Camino List Price: $18.98 Sale Price: $8.29 Used From: $8.28 |
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DR. JOHN LOCKED DOWN |
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Dana Deal’s ‘absurd and One-sided’ Says Shareholder
Dana Corporation's largest shareholder has sent a letter to the board of the auto-parts maker criticizing a recent deal, reported the Associated Press. The Hedge Fund Appaloosa Management, a shareholder, said that the investment deal reached two weeks ago "absurd and one-sided."
Toledo-based Dana won a commitment from private-equity firm Centerbridge Capital Partners to invest as much as $750 million. Meanwhile, Appaloosa said that the deal is a loser for Dana shareholders.
New Jersey hedge fund Appaloosa Management LP said in a letter to Dana's board that the agreement, under which private-equity firm Centerbridge Capital Partners LP made an investment commitment for as much as $750 million, "will yield far less than the maximum recoveries available to stakeholders," reported the Detroit News.
As round and dynamic as a Subaru wheel bearing, the concerns are rolling. In June, Appaloosa signaled that the fund run by billionaire David Tepper, owner of a 15 percent stake in Dana and a "substantial" owner of its debt, may guide a group of investors in offering an alternative to the bankruptcy reorganization plan Dana was developing.
A week later, Dana announced the Centerbridge deal, which also covered a pact with two unions regarding the creation of union-managed voluntary employees' beneficiary associations, or VEBAs, to manage retiree health and long-term disability benefits for workers. The auto supplier would cease providing those benefits and fund the VEBAs, which are separate trusts, with a payment of about $700 million in cash and $80 million in stock of the reorganized company, the News said.
The VEBAs would allow the auto supplier to remove a liability of about $1 billion from its balance sheet, according to court papers. Both the Centerbridge and labor deals need bankruptcy court approval.
Appaloosa said in its correspondence that "management and its advisers continue to resist our efforts to obtain" information needed to develop an alternative plan. The utilization of such fund is expected to result in creditors being fully paid and stockholders receiving some sort of return. A copy of the letter was attached in a filing Thursday with the Securities and Exchange Commission.
"To date, management has conditioned our access to information upon us agreeing to give up inherent rights of a stakeholder, including our right to make a proposal without management's prior approval, and has ceded to Centerbridge material decision making authority regarding the terms of access to information," said Appaloosa. "The efforts of management and its advisers in concert with Centerbridge to exclude interested investors from the process will inevitably ensure that no alternative competitive proposals ever materialize."
Dana has been in Chapter 11 proceedings since March 2006. The auto supplier is expected to file its reorganization plan by Sept. 3. Then, the company's exclusive right to file a plan would expire and investors would be free to submit contender plans. In time, the auto supplier expects to emerge from bankruptcy and aim to return in the black.
Regardless of the alleged hindrances in getting information, Appaloosa outlined in its letter what a potential investment package from it could entail. It too proposes up to $750 million in equity investment, but it also is proposing to obtain a $1.5 billion credit facility and issue unsecured notes, the amount of which to be determined, in exit financing, added The News.
Appaloosa, which runs about $3 billion in assets, has been a key player in a number of large Chapter 11 cases. It currently leads a group of investors that have decided to thrust $2.55 billion into Delphi Corp. to finance its emergence from bankruptcy. The said deal with is itself being defied by Highland Capital Partners.
About the Author
Anthony Fontanelle is a 35-year-old automotive buff who grew up in the Windy City. He does freelance work for an automotive magazine when he is not busy customizing cars in his shop.
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