================================================================= ALLIED HOLDINGS BANKRUPTCY NEWS Issue Number 1 ----------------------------------------------------------------- Copyright 2005 (ISSN XXXX-XXXX) August 2, 2005 ----------------------------------------------------------------- Bankruptcy Creditors' Service, Inc. 215-945-7000 FAX 215-945-7001 ----------------------------------------------------------------- ALLIED HOLDINGS BANKRUPTCY NEWS is published by Bankruptcy Creditors' Service, Inc., 572 Fernwood Lane, Fairless Hills, Pennsylvania 19030, on an ad hoc basis (generally every 10 to 20 days) as significant activity occurs in the Debtors' cases. New issues are prepared by Marie Therese V. Profetana, Christopher G. Patalinghug, Frauline S. Abangan and Peter A. Chapman, Editors. Subscription rate is US$45 per issue. Any re-mailing of ALLIED HOLDINGS BANKRUPTCY NEWS is prohibited. ================================================================= IN THIS ISSUE ------------- [00000] HOW TO SUBSCRIBE TO ALLIED HOLDINGS BANKRUPTCY NEWS [00001] BACKGROUND & DESCRIPTION OF ALLIED HOLDINGS [00002] ALLIED HOLDINGS' BALANCE SHEET AT MARCH 31, 2005 [00003] COMPANY'S PRESS RELEASE ANNOUNCING CHAPTER 11 FILING [00004] ALLIED HOLDINGS' CHAPTER 11 DATABASE [00005] LIST OF ALLIED HOLDINGS' 40 LARGEST UNSECURED CREDITORS [00006] STANDARD & POOR'S LOWERS ALLIED HOLDINGS' RATINGS TO "D" [00007] DEBTORS' MOTION FOR JOINT ADMINISTRATION OF CASES [00008] DEBTORS' MOTION TO OBTAIN $230 MILLION OF DIP FINANICNG [00009] LIST OF ALLIED HOLDINGS' EQUITY SECURITY HOLDERS KEY DATE CALENDAR ----------------- 07/31/05 Voluntary Petition Date 08/15/05 Deadline for filing Schedules of Assets and Liabilities 08/15/05 Deadline for filing Statement of Financial Affairs 08/15/05 Deadline for filing Lists of Leases and Contracts 08/20/05 Deadline to provide Utilities with adequate assurance 09/29/05 Deadline to make decisions about lease dispositions 10/29/05 Deadline to remove actions pursuant to F.R.B.P. 9027 11/28/05 Expiration of Debtors' Exclusive Plan Proposal Period 01/27/06 Expiration of Debtors' Exclusive Solicitation Period 07/31/07 Deadline for Debtors to Commence Avoidance Actions Organizational Meeting with UST to form Committees First Meeting of Creditors pursuant to 11 USC Sec. 341 Bar Date for filing Proofs of Claim ----------------------------------------------------------------- [00000] HOW TO SUBSCRIBE TO ALLIED HOLDINGS BANKRUPTCY NEWS ----------------------------------------------------------------- ALLIED HOLDINGS BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtors' chapter 11 proceedings. The subscription rate is US$45 per issue. Newsletters are delivered via e-mail; invoices, transmitted following publication of each newsletter issue, arrive by fax. Re-mailing of ALLIED HOLDINGS BANKRUPTCY NEWS is prohibited. Distribution to multiple individuals at the same firm is provided at no additional charge; folks outside of your firm should set-up and pay for their own subscriptions. Subscriptions may be canceled at any time without further obligation. 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Please enter my personal subscription to ALLIED HOLDINGS BANKRUPTCY NEWS at US$45 per issue until I tell you to cancel my subscription. Name: ---------------------------------------------- Firm: ---------------------------------------------- Address: ---------------------------------------------- ---------------------------------------------- Phone: ---------------------------------------------- Fax: ---------------------------------------------- E-Mail: ---------------------------------------------- (Distribution to multiple professionals at the same firm is provided at no additional cost.) ALLIED HOLDINGS BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtors' chapter 11 proceeding. The subscription rate is US$45 per issue. Newsletters are delivered via e-mail; invoices, transmitted following publication of each newsletter issue, arrive by fax. Re-mailing of ALLIED HOLDINGS BANKRUPTCY NEWS is prohibited. Distribution to multiple individuals at the same firm is provided at no additional charge; folks outside of your firm should set-up and pay for their own subscriptions. Subscriptions may be canceled at any time without further obligation. ----------------------------------------------------------------- [00001] BACKGROUND & DESCRIPTION OF ALLIED HOLDINGS ----------------------------------------------------------------- ALLIED HOLDINGS, INC. 160 Clairemont Avenue, Suite 200 Decatur, Georgia 30030 Telephone (404) 373-4285 http://www.alliedholdings.com/ Allied Holdings, Inc., is the largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. Thousands of Allied drivers run short-haul routes over distances averaging less than three hundred miles. Allied Holdings' 2004 revenues were approximately $895 million. Allied's largest customers are: -- General Motors Corporation, -- Ford Motor Company, -- DaimlerChrysler Corporation, -- Toyota, and -- Honda, accounting for approximately 88% of the revenues generated by delivery services. The Big Three -- GM, Ford and DaimlerChrysler -- account for 73% of revenues from delivery services, while Toyota and Honda together account for 15% of revenues from delivery services. Employees Allied has over 6,400 employees. Most of these employees are based at Allied's 133 terminals located throughout the United States, Canada and Mexico. Over 3,900 of these employees are unionized drivers represented by collective bargaining units affiliated with the International Brotherhood of Teamsters. Allied also contracts with Teamster owner-operators in its system. As of March 31, 2005, Allied owned 3,438 tractors and 4,275 trailers specially designed for transporting vehicles. Each tractor-trailer unit is called a Rig. Allied leases approximately 451 Rigs and uses 691 Rigs owned by its owner- operators. Thus, in total, Allied has 4,580 Rigs under management in its North American operations. Allied has business operations in the Newnan Division of the Court. Debtor Groups Allied Holdings is a publicly held, Georgia corporation with its corporate headquarters located in Decatur, Georgia. Allied Holdings is one of the Debtors. Allied Holdings has four direct subsidiaries. Three of these subsidiaries are Debtors, and one is not. One subsidiary that is a Debtor is Allied Automotive Group, Inc., which provides the short-haul vehicle delivery services. The Automotive Group comprises of: -- Allied Automotive Group, Inc., -- Allied Systems, Ltd. (L.P.), -- Allied Systems (Canada) Company, -- QAT, Inc., -- RMX LLC, -- Transport Support LLC, -- F.J. Boutell Driveaway LLC, -- Allied Freight Broker LLC, -- GACS Incorporated, and -- Commercial Carriers, Inc. Another subsidiary that is a Debtor is Axis Group, Inc., which provides support services with respect to vehicle distribution and transportation services. The Axis Group comprises of: -- Axis Group, Inc., -- Kar-Tainer International LLC, -- Axis Netherlands, LLC, -- Axis Areta, LLC, -- Logistic Technology, LLC, -- Logistic Systems, LLC, -- CT Services, Inc., -- Cordin Transport LLC, -- Terminal Services LLC, -- Axis Canada Company, and -- Ace Operations, LLC. The third subsidiary that is a Debtor is AH Industries, Inc. (Alberta), which is not currently providing delivery services or support services. The subsidiary that is not a Debtor is Haul Insurance Limited (Cayman), which is a captive insurance company and which is not eligible to be a debtor in a bankruptcy case. All of the companies in the Automotive Group are Debtors. All of the U.S. and Canadian companies in the Axis Group are Debtors. The remaining Axis Group companies, comprised of certain foreign companies and certain entities in which Axis Group, Inc. holds only a minority interest, are not Debtors. Mr. King relates that the Automotive Group serves and supports substantially all of the major domestic and foreign automobile manufacturers. The Automotive Group offers a range of automotive delivery services, including the transportation of new, pre- owned, and off-lease vehicles to dealers from plants, rail ramps, inland distribution centers, ports and auctions, while also providing yard management services including vehicle railcar loading and unloading services. The Automotive Group provides these services from 81 terminals, 16 of which are owned and 65 of which are leased, located throughout the United States and Canada. The Axis Group provides vehicle distribution and transportation support services to both the pre-owned and new vehicle markets as well as to other segments of the automotive and car rental industries. These services include: (a) carrier management and brokerage services for various automotive clients; (b) a variety of related support services to the pre-owned and off-lease vehicle markets, including vehicle inspections, title storage, marshalling and rail yard management; (c) a computerized vehicle tracking service for Toyota which tracks over 1.5 million units per year; (d) vehicle processing services at ports and inland distribution centers; and (e) logistics and distribution services to the Mexican automobile industry -- offered through its subsidiaries, Axis Logistica and ARETA SRL (neither are Debtors). The Axis Group operates 52 terminals located in the United States, Canada, Mexico and South Africa. The Axis Group also leases patented-designed equipment for containerized shipment of vehicles. Historical Overview According to Thomas H. King, the Company's executive vice president and chief financial officer, Allied was founded as "Motor Convoy" in 1934. Following industry deregulation in the early 1980s, Allied expanded geographically through acquisitions. In 1986, Motor Convoy and Auto Convoy, a car hauling company based in Dallas, Texas, formed a joint venture, which allowed access to new markets in Texas, Missouri, Louisiana and Kentucky. Motor Convoy and Auto Convoy merged in 1988 to create Allied Systems. In 1993, Allied Systems went public under its current name, "Allied Holdings, Inc." After the public offering, Allied made a number of acquisitions. In 1994, Allied obtained approximately 90% of the Canadian motor carrier market when it acquired Auto Haulaway. Through the Ryder Acquisition, in 1997, Allied expanded its operations in the western section of the United States and substantially increased its volume of business with certain customers, particularly General Motors. In 2000, Axis Group, Inc., purchased CT Group, Inc. -- now known as CT Services, Inc. -- a provider of vehicle inspection services to the pre-owned and off-lease vehicle market. Road to Bankruptcy Mr. King says there are three general factors that led the Debtors to seek Chapter 11 protection: (a) decreasing revenues, (b) increasing expenses, and (c) the consequent difficulty of servicing debt and maintaining adequate liquidity. Mr. King identified nine additional pressure points: (a) significant reduction in original equipment manufacture production by automobile manufacturers in North America over the past three years, particularly at the Big Three; (b) escalating cost structure under the current multi-year union contract with the Teamsters covering all U.S. employee drivers and mechanics and under the union contracts with the Teamsters covering Canadian employee drivers and mechanics; (c) substantial debt burden and debt-service expense; (d) continued excess capacity in the automotive delivery market, leading to increased pricing competition; (e) increases in diesel fuel costs not fully offset by Allied's fuel surcharge programs; (f) the inability to maintain compliance with covenants in their prepetitionsenior secured credit facility; (g) the inability to achieve the liquidity required by Allied; (h) significant recurring capital expenditures and maintenance costs associated with the fleet of Rigs; and (i) an increase in collateral required to support workers' compensation claims. "As a result of decreasing revenue and increasing expenses, Allied has suffered net losses in recent years," Mr. King reports. For the year ended December 31, 2003, Allied's net loss was approximately $8.6 million. In 2004, it jumped to $53.9 million. In the first quarter of 2005, the company's net loss was over $10 million. To maintain and sustain their business operations and preserve the going concern value of their assets and enterprise value of their businesses, and, further, in an effort to maximize the recoveries for their constituencies, the Debtors determined it would be in their best interests and the best interests of their creditors and estates to initiate Chapter 11 reorganization proceedings. "These proceedings will afford the Debtors the opportunity to increase revenues, lower their expenses, and reduce their debt burden," Mr. King says. Parallel CCAA Proceeding Contemporaneously with the filing of the Debtors' Chapter 11 cases, Allied Systems Company, AH Industries, Inc., and Axis Canada Company have filed or will immediately file a motion in Ontario Superior Court of Justice (Commercial List) seeking, among other things, recognition of their cases as "foreign proceedings" as defined by section 18.6 of the Companies' Creditors Arrangement Act, as amended, staying all proceedings against the Canadian Debtors, the Canadian Debtors' property and their directors and officers, and requesting recognition of the Georgia Bankruptcy Court and all proceedings before, all orders, judgments and decrees of the Georgia Bankruptcy Court. ----------------------------------------------------------------- [00002] ALLIED HOLDINGS' BALANCE SHEET AT MARCH 31, 2005 ----------------------------------------------------------------- Allied Holdings, Inc., And Subsidiaries Consolidated Balance Sheets (Unaudited) At March 31, 2005 ASSETS Current assets: Cash and cash equivalents $3,922,000 Restricted cash and cash equivalents 30,799,000 Receivables, net of allowances 56,255,000 Inventories 4,797,000 Deferred income taxes 4,775,000 Prepayments and other current assets 24,175,000 ------------ Total current assets 124,723,000 ------------ Property & equipment, net of accumulated depreciation 131,697,000 Goodwill, net 83,680,000 Other assets: Restricted cash and cash equivalents 62,434,000 Other noncurrent assets 36,515,000 ------------ Total other assets 98,949,000 ------------ Total assets $439,049,000 ============ LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Current maturities of long-term debt $13,500,000 Borrowings under revolving credit facilities 16,815,000 Accounts and notes payable 38,778,000 Accrued liabilities 99,254,000 ------------ Total current liabilities 168,347,000 ------------ Long-term debt, less current maturities 230,601,000 Postretirement benefits other than pensions 4,868,000 Deferred income taxes 16,214,000 Other long-term liabilities 70,888,000 Commitments and contingencies - Stockholders' deficit: Preferred stock, no par value - Common stock, no par value - Additional paid-in capital 48,464,000 Treasury stock, 139 shares at cost (707,000) Accumulated deficit (98,965,000) Accumulated other comprehensive loss, net of tax (661,000) Total stockholders' deficit (51,869,000) ------------ Total liabilities and stockholders' deficit $439,049,000 ============ ----------------------------------------------------------------- [00003] COMPANY'S PRESS RELEASE ANNOUNCING CHAPTER 11 FILING ----------------------------------------------------------------- Allied Holdings, Inc. Files for Chapter 11 Reorganization to Address Financial and Operational Challenges Company Obtains $230 Million Financing Facility to Support Continued Operations Company's Operations Will Continue in Normal Course DECATUR, Georgia -- August 1, 2005 -- Allied Holdings, Inc. (Amex: AHI) announced today that, in order to effect a financial restructuring, the Company and certain of its operating subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The filings were made in the U.S. Bankruptcy Court for the Northern District of Georgia. The Company and its subsidiaries are operating at all of its locations and anticipates that its various distribution and transportation services for the automotive industry will continue to operate in the normal course of business during the reorganization process. The Company will pay its vendors under normal terms for goods and services provided after today's filing. To help fund its continuing operations during the reorganization, Allied has secured debtor-in-possession financing in an amount up to $230 million from GE Commercial Finance, Morgan Stanley Senior Funding, Inc. and Marathon Asset Management. Subject to court approval, these funds will be available to help satisfy obligations associated with conducting the Company's business, including the payment of wages and benefits to active employees and retirees. Hugh E. Sawyer, Allied Holdings' President and Chief Executive Officer, stated, "We have made significant progress during the last few years in our efforts to restructure and streamline our operations, including measures to lower overhead expenditures, as well as reduce costs across our non-bargaining employee base. Our more efficient, focused organization has facilitated improvements in damage free deliveries, organic growth through new business with our customers, and reinforced the underlying potential of our core transportation services businesses at our operating subsidiaries. However, these positive developments have been significantly offset by automotive industry dynamics that continue to hamper our financial performance, including a sharp decline in new vehicle production, rising fuel costs, and increasing wage and benefit obligations under the Allied Automotive Group's master agreement with its Teamster-represented employees. "Reorganization under Chapter 11 will provide Allied with an opportunity and the forum to address these financial challenges, and we are committed to working cooperatively throughout the process to implement a plan of recovery that serves the Company, as well as the interests of its creditors, employees, customers, and suppliers. Our objective is to use this process to redesign our capital structure in order to lower our debt, reduce the multi-year cost increases associated with our contract with our Teamster-represented employees, address certain customer pricing issues, and take steps to improve our financial performance. "During this process, we will continue to provide quality service to our loyal customers," Mr. Sawyer continued. "We believe that the new $230 million credit facility will provide the opportunity for the Company to continue to operate in a reliable and stable manner. In addition, our vendors will be paid in full for all goods and services which are provided to the Company and our subsidiaries after the filing date. "We appreciate the ongoing efforts of our employees who have, over the past four years, made personal sacrifices and maintained their focus through a most challenging period. We will once again rely upon the dedication and support of our employees as we work together to build a more promising future for Allied Holdings." Allied Holdings' legal advisor is Troutman Sanders, LLP. The Company's financial advisor is Miller Buckfire & Co., LLC. More information about Allied's reorganization is available on the Company's Web site at http://www.alliedholdings.com/ About Allied Holdings Allied Holdings, Inc. is the parent company of several subsidiaries engaged in providing distribution and transportation services of new and used vehicles to the automotive industry. The services of Allied's subsidiaries span the finished vehicle continuum, and include car-hauling, intramodal transport, inspection, accessorization and dealer prep. Allied, through its subsidiaries, is the leading company in North America specializing in the delivery of new and used vehicles. ----------------------------------------------------------------- [00004] ALLIED HOLDINGS' CHAPTER 11 DATABASE ----------------------------------------------------------------- Lead Debtor: Allied Holdings, Inc. aka Allied Holdings 160 Clairemont Decatur, Georgia 30030-2557 Bankruptcy Case No.: 05-12515 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Allied Automotive Group, Inc. 05-12516 Allied Systems, Ltd. (L.P.) 05-12517 Allied Systems (Canada) Company 05-12518 QAT, Inc. 05-12519 RMX LLC 05-12520 Transport Support LLC 05-12521 F.J. Boutell Driveway LLC 05-12522 Allied Freight Broker LLC 05-12523 GACS Incorporated 05-12524 Commercial Carriers, Inc. 05-12525 Axis Group, Inc. 05-12526 Kar-Tainer International LLC 05-12527 Axis Netherlands, LLC 05-12528 Axis Areta, LLC 05-12529 Logistic Technology, LLC 05-12530 Logistic Systems, LLC 05-12531 CT Services, Inc. 05-12532 Cordin Transport LLC 05-12533 Terminal Services LLC 05-12534 Axis Canada Company 05-12535 Ace Operations, LLC 05-12536 AH Industries Inc. 05-12537 Chapter 11 Petition Date: July 31, 2005 Court: Northern District of Georgia (Newman) Judge: W.H. Drake, Jr. Debtors' Counsel: Jeffrey W. Kelley, Esq. Troutman Sanders, LLP Suite 5200, 600 Peachtree Street, Northeast Atlanta, Georgia 30308-2216 Tel: (404) 885-3383 Financial Condition of Allied Holdings, Inc., as of March 2005: Total Assets: $132,225,000 Total Debts: $179,895,000 Estimated Assets Estimated Debts ---------------- --------------- Allied Automotive Group, $10 Million to $50 Million to Inc. $50 Million $100 Million Allied Systems, Ltd. More than More than (L.P.) $100 Million $100 Million Allied Systems (Canada) $50 Million to More than Company $100 Million $100 Million QAT, Inc. $1 Million to $1 Million to $10 Million $10 Million RMX LLC $50,000 to $500,000 to $100,000 $1 Million Transport Support LLC $1 Million to $10 Million to $10 Million $50 Million F.J. Boutell Driveway LLC $1 Million to $10 Million to $10 Million $50 Million Allied Freight Broker LLC $1 Million to $50,000 to $10 Million $100,000 GACS Incorporated $1 Million to Less than $10 Million $50,000 Commercial Carriers, Inc. $1 Million to $1 Million to $10 Million $10 Million Axis Group, Inc. $10 Million to $10 Million to $50 Million $50 Million Kar-Tainer International $100,000 to $1 Million to LLC $500,000 $10 Million Axis Netherlands, LLC Less than Less than $50,000 $50,000 Axis Areta, LLC $1 Million to Less than $10 Million $50,000 Logistic Technology, LLC $100,000 to Less than $500,000 $50,000 Logistic Systems, LLC $500,000 to Less than $1 Million $50,000 CT Services, Inc. $10 Million to $500,000 to $50 Million $1 Million Cordin Transport LLC $500,000 to Less than $1 Million $50,000 Terminal Services LLC $1 Million to $100,000 to $10 Million $500,000 Axis Canada Company $500,000 to $1 Million $1 Million $10 Million Ace Operations, LLC Less than Less than $50,000 $50,000 AH Industries Inc. $500,000 to Less than $1 Million $50,000 ----------------------------------------------------------------- [00005] LIST OF ALLIED HOLDINGS' 40 LARGEST UNSECURED CREDITORS ----------------------------------------------------------------- Entity Nature of Claim Claim Amount ------ --------------- ------------ Thomas M. Korsman Indenture Trustee $150,000,000 Vice President Wells Fargo Bank MAC N9303-120 Sixth and Marquette Minneapolis, MN 55479 Central State/H&W 3500 Benefits $2,468,019 Mellon Financial Services A/C Central States Pension Fund 5503 North Cumberland Road Chicago, IL 60656 Michelin Tire N.A./Atlanta Trade debt $827,625 P.O. Box 100860 Atlanta, GA 30384-0860 Volvo Action Service Trade debt $666,781 P.O. Box 26113 Greensboro, NC 27402-6113 Ford Motor Company/Claims Damage claims $605,293 Body and Assembly P.O. Box 651311 Charlotte, NC 28265-1311 IBM Corp. Trade debt $477,554 PNC Bank-ATL Lockbox IBM Corp-Lock Box 534151 1669 Phoenix Parkway Atlanta, GA 30349 SGS Automotive Service- Trade debt $419,652 Philadelphia P.O. Box 2505 Carol Stream, IL 60132-2502 GM of Canada Ltd.-ALZS Damage Claim $410,924 1908 Colonel Sam Drive Attn: Cashier 007002 Oshawa, ON L1H8P7 Cummins South, Inc. Trade debt $407,376 P.O. Box 116595 Atlanta, GA 30368-6595 Delavan Industries Inc. Trade debt $395,947 Buffalo P.O. Box 1715 Buffalo, NY 14240 Exotic Auto Transport Trip lease $341,081 P.O. Box 72 Lebanon, MO 65536 U.S. Security Associates Trade debt $333,651 Inc. P.O. Box 931703 Atlanta, GA 31193 Michelin North America/ Trade debt $301,322 Canada - Accounts Receivable P.O. Box 11291 Station Centreville Montreal, Quebec H3C 5G9 Canada Bandag Incorporated Trade debt $284,484 P.O. Box 92090 Chicago, IL 60675-2090 Servi-Flotte Inc. Trade debt $264,179 225, Chemin Des Iles Levis, Quebec G6V7M5 Canada Fleet Charge Trade debt $257,956 P.O. Box 930895 Kansas City, MO 64193-0895 Excel Transporting & Towing Trip lease $242,016 Fleet Charge Trade debt $210,079 Delavan Industries Inc. Trade debt $193,800 Buffalo Delavan Industries Inc. Trade debt $191,678 St. Catherines Daimler Chrysler ALZS Damage claims $163,562 American Express Trade debt $162,755 Bandag Canada Ltd. Trade debt $152,796 Deloitte & Touche- Atlanta Professional $152,353 Cottrell, Inc. Fixed assets $139,569 Sterling Truck & Trailer Trade debt $139,190 Sales Champion Auto Carriers, Inc. Trip lease $131,122 Brothers Auto Transport Inc. Trip lease $128,916 Hunt Enterprises Landlord $123,142 Truck Service of Virginia Trade debt $123,019 Inc. - Disputan B&D Management, Inc. Trade debt $122,304 W W Williams Fixed assets $116,997 Corporate Lodging Trade debt $109,149 P.A.T. Auto Transport, Inc. Trip lease $103,846 Goodyear Tire & Rubber Trade debt $100,997 Company - ATL Cintas/National Rental A/R Trade debt $100,257 State of Michigan/Treasury Taxes $100,000 Weller Truck Parts Trade payables $96,713 Clarke Power Services Inc. Trade payables $95,362 GM of Canada Ltd. - CANG Damage claims $91,475 ----------------------------------------------------------------- [00006] STANDARD & POOR'S LOWERS ALLIED HOLDINGS' RATINGS TO "D" ----------------------------------------------------------------- NEW YORK, New York -- August 1, 2005 -- Standard & Poor's Ratings Services today lowered its corporate credit rating on Allied Holdings Inc. to 'D' from 'CCC-' following the car hauling company's Chapter 11 bankruptcy filing. In addition, Standard & Poor's lowered its rating on Allied's senior unsecured debt to 'D' from 'CC'. The bankruptcy filing was precipitated by very difficult industry conditions, including reduced vehicle production, weak financial performance, and constrained liquidity that led to losses, reduced cash flow generation, and limited liquidity. Decatur, Ga.-based Allied had total debt (including the present value of operating leases) of about $290 million as of March 31, 2005. Industry conditions for automotive suppliers including Allied Holdings have deteriorated during the past year, as the North American car market remains soft. Despite some recent price increases, the car-hauling industry faced significant pricing pressure from the large auto manufacturers, which represent a majority of the company's revenues, and increasing labor costs. Additionally, high fuel prices hurt Allied's performance, despite implementation of fuel surcharges. As a result the company's earnings and cash flow measures were extremely weak with EBITDA interest coverage of about 1x and funds from operations to debt at around 6% as of March 31, 2005. "Although the most recent company financial report dates back to the first quarter of 2005 [March 2005], we believe Allied's earnings and cash are substantially short of the company's business plan," said Standard & Poor's credit analyst Eric Ballantine. Liquidity was believed to be very thin, because of poor cash flow generation, and the company recently filed its eighth bank amendment to cure certain bank covenant violations. ----------------------------------------------------------------- [00007] DEBTORS' MOTION FOR JOINT ADMINISTRATION OF CASES ----------------------------------------------------------------- Allied Holdings, Inc., and its 23 debtor-affiliates sought and obtained a Court order authorizing the joint administration of their Chapter 11 cases for procedural purposes only. All pleadings relating to any of the Debtors' cases will bear a joint caption. The Court clerk will file and maintain all of those pleadings under the existing docket for Allied Holdings, Inc. The Court permits the Debtors to combine notices to creditors. The joint caption will read: IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF GEORGIA NEWNAN DIVISION _______________________________ | In re: | Chapter 11 ALLIED HOLDINGS, INC., et al. | Case Nos. 05-12515 | through 05-12537 Debtors. | Jointly Administered | | Judge Drake _______________________________| Rule 1015(b) of the Federal Rules of Bankruptcy Procedure provides that the Court may order the joint administration of the estates of a debtor and one or more affiliates: (b) Cases Involving Two or More Related Debtors. If . . . two or more petitions are pending in the same court by or against . . . a debtor and an affiliate, the court may order a joint administration of the estates. According to Thomas H. King, executive vice president and chief financial officer of Allied Holdings, Inc., the Debtors are "affiliates" as that term is defined in Section 101(2) of the Bankruptcy Code. "I anticipate significant activity during these cases and believe that most hearings and contested matters will apply to all of the Debtors' cases equally. Consequently, joint administration of these cases will promote the economical and efficient administration of the Debtors' estates, unencumbered by the procedural problems otherwise attendant to the administration of separate, albeit related, cases. Additionally, joint administration will avoid the burdensome necessity of duplicating notices to creditors," he says. Mr. King adds that joint procedural administration of the Debtors' cases will also benefit creditors because creditors who respond to motions affecting multiple Debtors or who file their own motions affecting multiple Debtors will not be forced to prepare and file multiple sets of papers that may be identical except for their captions. "No creditor will be prejudiced by joint administration. Joint administration is merely procedural; it has no impact on creditors' substantive rights," Mr. King emphasizes. Joint administration, Mr. King notes, will also relieve the Court of making numerous duplicative orders and keeping numerous duplicative files. "Furthermore, supervision of the administrative aspects of these Chapter 11 cases by the Office of the United States Trustee will be simplified." ----------------------------------------------------------------- [00008] DEBTORS' MOTION TO OBTAIN $230 MILLION OF DIP FINANICNG ----------------------------------------------------------------- As of the Petition Date, Allied Holdings, Inc., owed approximately $330 million in funded debt. "This debt was comprised of approximately $180 million of obligations under Allied's prepetition senior secured credit facility and $150 million of borrowings evidenced by unsecured notes issued pursuant to the terms of a trust indenture," Thomas H. King, executive vice president and chief financial officer of Allied Holdings, Inc., relates. Allied's Prepetition Credit Facility is provided by a group of lenders with Ableco Finance, LLC (operated by Cerberus Partners LP) as collateral agent and Wells Fargo Foothill, Inc., formerly known as Foothill Capital Corporation, as administrative agent. The Prepetition Credit Facility is comprised of two facilities: (i) a revolving credit facility pursuant to which certain Prepetition Lenders committed to advance loans and provide letters of credit in an aggregate principal amount of up to $90 million, and (ii) three term loans pursuant to which certain Prepetition Lenders advanced loans in an aggregate principal amount of $145 million. Mr. King points out that the Debtors have reached the limits of their borrowing availability under the Prepetition Credit Facility and are in breach of certain covenants contained in the Prepetition Financing Documents. The Debtors need immediate access to cash to fund their day-to- day operations, Mr. King tells the Court. The Debtors project cash losses during the first three weeks in August: Allied Holdings, Inc., and Subsidiaries Forecast Forecast Forecast Week Week Week Ended Ended Ended 7-Aug 14-Aug 21-Aug -------- -------- -------- Receipts: A/R Receipts - - - Non-A/R Receipts $342,000 $342,000 $342,000 -------- -------- -------- Total Receipts $342,000 $342,000 $342,000 Disbursements A/P Disbursements 126,000 75,000 124,000 Prepetition Critical Vendors 500,000 - 250,000 Payroll & Payroll Taxes 2,000 2,000 217,000 -------- -------- -------- Total Disbursements $628,000 $77,000 $591,000 -------- -------- -------- Division Net Cash Flow ($286,000) ($265,000) ($248,000) -------- -------- -------- The Debtors believe that pursuant to the Prepetition Credit Facility, the Lenders have asserted valid, binding, enforceable and perfected first priority liens on substantially all of the Debtors' assets including, without limitation, the Debtors' accounts receivable, inventory and cash. Immediate Cash Collateral Access To bridge any gap between the filing of the Debtors' chapter 11 petitions and interim Court approval of the DIP Financing Facility, the Debtors and the Lenders entered into a Stipulation agreeing that: (1) The Debtors are authorized to use the Cash Collateral to protect their assets and property, preserve their estates and satisfy necessary expenses incurred and to be incurred by them in the operation of their businesses and properties; (2) As adequate protection, the Collateral Agent for the benefit of the Agents and the Prepetition Lenders is granted a first priority replacement lien against, and a security interest in, all postpetition property of the same kind as the Prepetition Collateral to the extent of the Debtors' use of the Cash Collateral and decrease in the value of the Prepetition Collateral. (3) Pending further Court order, the Debtors' authority to use the Cash Collateral will terminate on formal closing (and funding) of the DIP Facility. (4) To the extent the adequate protection provided proves inadequate, as determined by the Court, the Collateral Agent for the benefit of the Agents and the Prepetition Lenders will be granted an allowed administrative claim. A full-text copy of the Court-approved Cash Collateral Agreement is available for free at: http://bankrupt.com/misc/alliedcashcollateralpact.pdf New DIP Facility Mitchel J. Perkiel, Esq., at Troutman Sanders, LLP, tells Judge Drake that Miller Buckfire contacted 20 potential DIP Lenders prior to the Petition Date. The goal was to locate a lender to locate a lender that would lend up to $230 million to pay off approximately $185,500,000 owed to the Prepetition Lenders and provide Allied with post-petition working capital financing. Miller Buckfire found a DIP Lender. The salient terms of the DIP Facility are: Borrowers: Allied Holdings, Inc. and Allied Systems, Ltd. (L.P.). Guarantors: Each of the other Debtors. Administrative Agent and Collateral Agent: General Electric Capital Corporation Lenders: Morgan Stanley Senior Funding, Inc. General Electric Capital Corporation Marathon Structured Finance Fund, L.P. Type of Facility: A first priority secured credit facility to be provided to the Borrowers with a maximum credit amount of $230,000,000, consisting of: (1) a revolving line of credit up to the lesser of: (a) $130,000,000, or (b) a Borrowing Base equal to: -- 85% of eligible accounts receivable, plus -- 85% of the gross orderly liquidation value of Eligible Rolling Stock, plus -- 50% of the fair market value of Eligible Real Estate, less -- reserves subject to adjustment by the Administrative Agent; including, in each case, a $75,000,000 letter of credit subfacility. In addition, the DIP Revolver also includes a $10,000,000 swingline subfacility, funded: (x) $100,000,000 by GE Capital and (y) $30,000,000 by Marathon; (2) a Term A Loan up to $20,000,000, which will be fully funded by Marathon on the Closing Date; (3) a Term B Loan up to $80,000,000 (funded 50%/50% by Morgan Stanley and Marathon); and (4) a $75,000,000 Subfacility to back Letters Maturity Date: 18 months from the Closing Date. Security Package: Except for Permitted Encumbrances, the DIP Facility is secured in accordance with Sections 364(c) and (d) of the Bankruptcy Code by valid, binding, continuing, enforceable, fully perfected and unavoidable first priority senior priming security interests in and liens on the Debtors' assets. Those superpriority liens exclude recoveries on account of Avoidance Actions under chapter 5 of the Bankruptcy Code and are junior to the Prepetition Agents' and Prepetition Lenders' rights in and to an Indemnification Fund and a Cash Collateral Fund. Carve-Out: The DIP Lenders agree to a $1,500,000 Carve- Out from their liens to permit payment of professional fees and fees payable to the U.S. Trustee. Interest Rate: Revolving Loans will accrue interest, at the Debtors' option, at: (x) 200 basis points over an Index Rate (equal to the rate publicly quoted from time to time by The Wall Street Journal as the "base rate on corporate loans posted by at least 75% of the nation's 30 largest banks") or (y) LIBOR plus 300 basis points. The interest rate payable on the Term A Loan is LIBOR plus 5.50%. The interest rate payable on the Term B Loan is LIBOR plus 9.50%. Fees & Expenses: The Debtors agree to pay the Lenders: -- a $4,025,000 Facility Closing Fee; -- customary 2.75% letter of credit fees; -- an annual $150,000 Administrative Fee; Mandatory Prepayments: The Debtors are required to deliver all of the net cash proceeds from any asset sale to the DIP Lenders, except for sales of inventory or Rigs in the ordinary course of business. Minimum EBITDA Covenant: The Debtors promise the DIP Lenders that EBITDA will exceed: For the 12-Month Period Ending Minimum EBITDA ---------------- -------------- August 31, 2005 $42,185,000 September 30, 2005 $43,970,000 October 31, 2005 $44,085,000 November 30, 2005 $42,167,000 December 31, 2005 $40,535,000 January 31, 2006 $40,350,000 February 28, 2006 $38,972,000 March 31, 2006 $38,543,000 April 30, 2006 $40,464,000 May 31, 2006 $41,415,000 June 30, 2006 $40,929,000 July 31, 2006 $40,093,000 August 31, 2006 $39,566,000 September 30, 2006 $38,403,000 October 31, 2006 $38,948,000 November 30, 2006 $40,910,000 December 31, 2006 $39,749,000 Minimum Fixed Charge Coverage Ratio Covenant: The Debtors covenant with the DIP Lenders that their ratio of EBITDA to Fixed Charges will not fall below: For the 12-Month Minimum Fixed Charge Period Ending Coverage Ratio ---------------- -------------------- August 31, 2005 0.69:1.0 September 30, 2005 0.70:1.0 October 31, 2005 0.67:1.0 November 30, 2005 0.63:1.0 December 31, 2005 0.62:1.0 January 31, 2006 0.62:1.0 February 28, 2006 0.60:1.0 March 31, 2006 0.59:1.0 April 30, 2006 0.64:1.0 May 31, 2006 0.66:1.0 June 30, 2006 0.67:1.0 July 31, 2006 0.69:1.0 August 31, 2006 0.69:1.0 September 30, 2006 0.68:1.0 October 31, 2006 0.70:1.0 November 30, 2006 0.73:1.0 December 31, 2006 0.69:1.0 Maximum Leverage Ratio Covenant: The Debtors covenant with the DIP Lenders that their ratio of Funded Debt (including the average daily closing balance of the Revolving Loan for preceding 30 days) to EBITDA won't exceed: For the 12-Month Maximum Period Ending Leverage Ratio ---------------- -------------- August 31, 2005 4.8:1.0 September 30, 2005 4.3:1.0 October 31, 2005 4.0:1.0 November 30, 2005 4.3:1.0 December 31, 2005 4.4:1.0 January 31, 2006 4.7:1.0 February 28, 2006 4.9:1.0 March 31, 2006 5.0:1.0 April 30, 2006 4.8:1.0 May 31, 2006 4.7:1.0 June 30, 2006 4.7:1.0 July 31, 2006 4.8:1.0 August 31, 2006 4.9:1.0 September 30, 2006 5.1:1.0 October 31, 2006 4.8:1.0 November 30, 2006 4.7:1.0 December 31, 2006 5.0:1.0 CapEx Limits: The Debtors agree to limit their Capital Expenditures to: For the 12-Month Maximum Capital Period Ending Expenditures ---------------- --------------- August 31, 2005 $24,032,000 September 30, 2005 $26,736,000 October 31, 2005 $29,864,000 November 30, 2005 $31,581,000 December 31, 2005 $31,046,000 January 31, 2006 $30,914,000 February 28, 2006 $31,247,000 March 31, 2006 $32,402,000 April 30, 2006 $34,451,000 May 31, 2006 $34,978,000 June 30, 2006 $34,640,000 July 31, 2006 $34,172,000 August 31, 2006 $33,253,000 September 30, 2006 $32,327,000 October 31, 2006 $31,616,000 November 30, 2006 $31,929,000 December 31, 2006 $33,001,000 At the First Day Hearing, Judge Drake authorized the Debtors, in an interim basis, pending a Final DIP Financing Hearing, to enter into the DIP Financing Agreement. The Debtors are authorized to immediately pay off $185,500,000 owed to the Prepetition Lenders. Any Official Committee of Unsecured Creditors will have 60 days to investigate and challenge the Prepetition Lenders' liens. Canadian Cash Collateral The Bankruptcy Court, on an interim basis, also authorized the Debtors, particularly Allied Systems (Canada) Company, to use their cash, cash equivalents, accounts, accounts receivables, and all products and proceeds on deposit with The Bank of Nova Scotia, so as to fund, among other things, ongoing working capital needs of Allied. Judge Drake restrains and prohibits Scotia from exercising or implementing any rights of offset, recoupment, restraint, sweep, reserve or other similar application against the Cash Collateral on account of any outstanding prepetition general unsecured advances made by Scotia to Allied Canada pursuant to a CN$2.5 million revolving credit agreement dated June 9, 2004, by and between Allied Company and Scotia. Allied Canada will have immediate and uninterrupted access to and use of all of the Canadian Accounts so as to allow any and all checks to be fully credited and processed for use by Allied Canada in the ordinary course; provided, however, that Scotia will not be required to advance or loan any funds to Allied Canada and Allied Canada's use of the Canadian Cash Collateral will be limited to the actual cash balances presently, and as may become available in, the Canadian Accounts and the cash collections as may be received by and deposited into the Canadian Accounts. Scotia is granted on account of its claims under the Prepetition Scotia Credit Agreement, the continuation of its interests in and claims to the Canadian Cash Collateral, and the indubitable equivalent of Scotia's "security" consisting of the continued maintenance and preservation in accordance with its present terms of a $2.6 million Standby Letter of Credit previously issued to and for the benefit of Scotia by Wells Fargo Bank, N.A., and to provide continuing security and assurance of repayment for any outstanding loans and advances by Scotia to Allied Canada. Final Hearing The Court will convene a Final DIP Financing hearing on August 24, 2005, at 10:00 a.m. Objections to the DIP financing arrangement, if any, must be filed and served by August 19. Leslie A. Plaskon, Esq., at Paul, Hastings, Janofsky & Walker LLP, in New York, represents Morgan Stanley Senior Funding, Inc., in this transaction. General Electric Capital Corporation is represented by Hilary P. Jordan, Esq., at Kilpatrick Stockton LLP in Atlanta. Gerald T. Woods, Esq., at King & Spalding LLP, in Atlanta, represents Marathon Asset Management. Lee R. Bogdanoff, Esq., at Klee, Tuchin, Bogdanoff & Stern LLP, in Los Angeles, provides counsel to the Prepetition Lenders. Anthony J. Smits, Esq., and Jonathan B. Alter, Esq., at Bingham McCutchen, LLP, in Hartfort, Conn., represents an ad hoc committee of senior noteholders. ----------------------------------------------------------------- [00009] LIST OF ALLIED HOLDINGS' EQUITY SECURITY HOLDERS ----------------------------------------------------------------- Pursuant to Rule 1007(a)(3) of the Federal Rules of Bankruptcy Procedure, Allied Holdings, Inc., delivered to the Court a list of its equity security holders. A full-text copy of the 148-page list is available for free at: http://bankrupt.com/misc/alliedequityholders.pdf *** End of Issue No. 1 ***