Marelli Approved to Borrow $519 Million at Start of Bankruptcy
(Bloomberg) -- Bankrupt auto-parts supplier Marelli Holdings Co. won court approval to borrow $518.9 million to help fund its reorganization after delaying a request for some parts of a financing package questioned by a federal bankruptcy watchdog.
The loan, which is being provided by Deutsche Bank and other senior Marelli lenders, will need to be approved in two stages, which is typical in large corporate bankruptcy cases. The company will return to court in the coming weeks to seek final approval from US Bankruptcy Judge Craig Goldblatt for the full, $1.1 billion financing package.
Marelli delayed seeking approval of some aspects of the financing package in order to resolve concerns from the US Trustee, which oversees bankruptcy cases on behalf of the US Justice Department. When the company returns to court, it will renew its request to refinance some of its older debt.
The financing package is 'complex,' company lawyer Spencer A. Winters told Goldblatt during a court hearing in Wilmington, Delaware. The proposal for it includes two loan tranches and four different payback priorities, he said.
The company filed bankruptcy Wednesday after being caught up in industry upheaval as electrification and automation forced global carmakers to shift their strategy to cope with declining sales in key markets. The company blamed tariffs and lingering supply-chain problems that began during the Covid-19 pandemic, according to court papers.
About 80% of the company's lenders have signed an agreement to support the restructuring, which is designed to shed debt, Marelli said in a statement. The loan approved Wednesday will help the company continue operating normally during the insolvency case.
Lenders involved in the restructuring include Fortress Credit Advisors, owed more than $270 million and funds managed by Strategic Value Partners owed more than $1.3 billion, according to court records.
The case is Marelli Automotive Lighting USA, 25-11034, US Bankruptcy Court, District of Delaware (Wilmington)
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