================================================================= COLLINS & AIKMAN BANKRUPTCY NEWS Issue Number 1 ----------------------------------------------------------------- Copyright 2005 (ISSN XXXX-XXXX) May 19, 2005 ----------------------------------------------------------------- Bankruptcy Creditors' Service, Inc. 215-945-7000 FAX 215-945-7001 ----------------------------------------------------------------- COLLINS & AIKMAN 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, Riza M. Deloria, Christopher G. Patalinghug, Frauline S. Abangan and Peter A. Chapman, Editors. Subscription rate is US$45 per issue. Any re-mailing of COLLINS & AIKMAN BANKRUPTCY NEWS is prohibited. ================================================================= IN THIS ISSUE ------------- [00000] HOW TO SUBSCRIBE TO COLLINS & AIKMAN BANKRUPTCY NEWS [00001] BACKGROUND & DESCRIPTION OF COLLINS & AIKMAN [00002] COLLINS & AIKMAN'S BALANCE SHEET AT SEPTEMBER 30, 2004 [00003] COMPANY'S PRESS RELEASE ANNOUNCING CHAPTER 11 FILING [00004] COLLINS & AIKMAN CHAPTER 11 DATABASE [00005] LIST OF COLLINS & AIKMAN'S 50-LARGEST UNSECURED CREDITORS [00006] S&P LOWERS COLLINS & AIKMAN'S RATINGS TO 'D' [00007] TEXTRON ASSESSING EXPOSURE TO COLLINS & AIKMAN BANKRUPTCY [00008] COLLINS & AIKMAN OWES UNIFI $8.2 MILLION [00009] DEBTORS' MOTION FOR AUTHORITY TO USE CASH COLLATERAL [00010] DEBTORS' MOTION TO OBTAIN $300,000,000 OF DIP FINANCING KEY DATE CALENDAR ----------------- 05/17/05 Voluntary Petition Date 06/01/05 Deadline for filing Schedules of Assets and Liabilities 06/01/05 Deadline for filing Statement of Financial Affairs 06/01/05 Deadline for filing Lists of Leases and Contracts 06/06/05 Deadline to provide Utilities with adequate assurance 06/20/05 Final DIP Financing Hearing 07/16/05 Deadline to make decisions about lease dispositions 07/17/05 DIP Financing Facility Financial Covenant Release Date 07/31/05 Deadline to Challenge Pre-Petition Lenders' Liens 08/15/05 Deadline to remove actions pursuant to F.R.B.P. 9027 09/14/05 Expiration of Debtors' Exclusive Plan Proposal Period 11/13/05 Expiration of Debtors' Exclusive Solicitation Period 05/17/07 Deadline for Debtors to Commence Avoidance Actions 05/17/07 $300,000,000 JPMorgan-Led DIP Financing Facility Matures 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 COLLINS & AIKMAN BANKRUPTCY NEWS ----------------------------------------------------------------- COLLINS & AIKMAN BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. 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Name: ---------------------------------------------- Firm: ---------------------------------------------- Address: ---------------------------------------------- ---------------------------------------------- Phone: ---------------------------------------------- Fax: ---------------------------------------------- E-Mail: ---------------------------------------------- (Distribution to multiple professionals at the same firm is provided at no additional cost.) COLLINS & AIKMAN 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 COLLINS & AIKMAN 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 COLLINS & AIKMAN ----------------------------------------------------------------- Collins & Aikman Corporation 250 Stephenson Highway Troy, Michigan 48083 Tel: (248) 824-2743 Fax: (248) 824-1512 http://www.collinsaikman.com/ Collins & Aikman is a global supplier of automotive components, systems and modules to large vehicle manufacturers, including DaimlerChrysler AG, Ford Motor Company, General Motors Corporation, Honda Motor Company, Inc., Nissan Motor Company Unlimited, Porsche Cars GB, Renault Createur D' Automobiles, Toyota SA, and Volkswagen AG. The Company conducts all of its operating activities through its wholly owned Collins & Aikman Products Co. subsidiary and direct and indirect subsidiaries of that corporation. Acquisitions Jay B. Knoll, vice president of Collins & Aikman Corporation, relates that in recent years, the Company's growth came primarily from acquisitions, which were funded by incurring additional debt and issuing new equity. According to Mr. Knoll, four major acquisitions more than doubled the Company's sales in recent years: (1) In June 2001, the Company acquired Becker Group, LLC, a supplier of plastics components to the automotive industry. (2) In September 2001, the Company purchased Joan Automotive Fabrics, a supplier of body cloth to the automotive supplier, and Joan's affiliated yarn dyeing operation, Western Avenue Dyers, LP. (3) In December 2001, the Company bought Textron Automotive Company's Trim division (aka TAC-Trim), one of the world's largest suppliers of instrument panels and fully assembled cockpit modules and a major automotive plastics manufacturer of interior and exterior trim components in North America, Europe and South America. (4) In 2002, the Company added Southwest Laminates, a fabric lamination business. "These four major acquisitions contributed approximately $2 billion of additional net sales in 2002, an increase of approximately 113% over the prior year," Mr. Knoll says. During 2002 and 2003, the Company also acquired: (a) Dutton Yarns' yarn texturizing business; (b) Delphi Corp.'s plastic injection molding plant and related equipment in Logrono, Spain; and (c) the remaining 50% interest of an Italian automotive joint venture. Mr. Knoll reports that these transactions also impacted the Company's financial results and capital structure. Employees The Company has a combined workforce of approximately 23,000 employees and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. Approximately 59% of the workforce is unionized, and each manufacturing facility with represented employees has a separate collective bargaining agreement. Business Segments The Company operates in two business segments: GLOBAL PLASTICS -- Through its Global Plastics segment, the Company manufactures a full range of plastic-based automotive interior products, including instrument panels and instrument panel components, door panels, consoles and other trim components, as well as exterior products including front and rear bumper parts, wheel flares, cladding and lighting lenses. The Company also assembles and sequences the delivery of complex systems and modules that incorporate these products and products from other suppliers, including cockpits, door modules and front and rear fascia modules. GLOBAL SOFT TRIM -- The Company's Global Soft Trim segment manufactures a variety of automotive flooring and acoustics products, automotive fabrics and convertible roof systems. Customers According to Mr. Knoll, the Company's largest OEM customers, accounting for approximately 80% of total sales, are DaimlerChrysler AG, General Motors Corporation and Ford Motor Company. The Company sells its products directly to OEMs under sales contracts that are obtained primarily through competitive bidding through sales offices in North America, South America, Europe and Asia-Pacific. "Although the Company receives purchase orders from most of its customers, these purchase orders typically provide for the supply of a customer's annual requirements for a particular model or assembly plant, renewable on a year-to-year basis, rather than for the purchase of a specific quantity of products," Mr. Knoll says. "The marketing effort is supported by design and manufacturing engineers working closely with customers beginning as early as the preliminary design stage through the manufacture and supply of the final product." Changes in the Industry Mr. Knoll relates that historically, large vehicle manufacturers operated internal divisions to provide a wide range of parts for their vehicles. "Recently, however, due to competitive pressures, OEMs have been forced to move towards a competitive outsourcing process for a wide range of automotive parts to lower their input costs." Mr. Knoll observes that the automotive part supplier industry has also been changed by consolidation among suppliers, globalization of suppliers, increased demand for modules and systems (rather than individual components), increased demand for quality products and increased pressure on vehicle manufacturers (and therefore on part suppliers) to respond more quickly to customer demand. "The Company has responded by working to become a leading manufacturer of automotive interior and exterior trim components. To continue to achieve this goal, the Company must realize the synergy and cost savings opportunities created by the combination of its vast array of products and leverage its development skills and manufacturing capabilities. Therefore, the Company continues to seek out opportunities to bundle multiple components into integrated packages, continue to improve manufacturing efficiency, pursue cost-saving opportunities through critically analyzing each aspect of the process and maintain focus on innovation and research and development," Mr. Knoll relates. Summary of Prepetition Indebtedness Historically, the Company's principal sources of funds were cash generated from operating activities and borrowings under its revolving credit facilities and receivables arrangements. (1) Senior Secured Credit Facility On December 20, 2001, Collins & Aikman and substantially all of its domestic direct and indirect subsidiaries entered into a senior secured credit facility with a syndicate of institutions led by JPMorgan Chase Bank, as administrative agent. The loan was amended on September 1, 2004. It is now comprised of: -- a $400 million Tranche B-1 term loan that matures on August 31, 2011 (with quarterly payments of $1 million), -- a $170 million supplemental revolving credit facility that matures on August 31, 2009, and -- a $105 million revolving credit facility that also matures on August 31, 2009. As of the Petition Date, there was approximately $674 million outstanding under the Senior Secured Credit Facility. (2) Receivables Facility Collins & Aikman has an agreement to sell, on an ongoing basis, the trade accounts receivable of certain business operations to, Carcorp, Inc., a wholly owned, bankruptcy- remote, special purpose subsidiary under the accounts receivable securitization facility. Originally, the lenders were JPMorgan and certain other parties. On December 10, 2004, General Electric Credit Corporation became the agent and sole lender in the Receivables Facility as a result of an assignment from JPMorgan and the other parties. At that time, GECC extended the Receivables Facility termination date to March 2006. Subject to certain conditions, from time to time Carcorp sells an undivided fractional ownership interest in a pool of domestic and certain Canadian receivables to various commercial paper conduits, which are supported by a committed liquidity facility. When this occurs, Carcorp retains a subordinated interest in the receivables. The sales proceeds are less than the face amount of accounts receivable sold by an amount that approximates the purchaser's financing costs. Collins & Aikman services, administers and collects the receivables on behalf of Carcorp and the conduit. As the receivables are converted to cash through payments by customers, new receivables are added to the pool. (3) The Indentures On December 20, 2001, Collins & Aikman Products Co., the sole direct subsidiary of Collins & Aikman, issued $500 million of 10-3/4% Senior Notes, due 2011. BNY Midwest Trust Company serves as indenture trustee to the Senior Notes. The Guarantor Parties have guaranteed the Senior Notes on an unsecured senior basis. As of the Petition Date, there was approximately $500 million outstanding under the Senior Notes. On August 26, 2004, Products issued $415 million of 12-7/8% Senior Subordinated Notes, due August 15, 2012. BNY Midwest Trust Company serves as indenture trustee under the Subsidiary Notes. The Guarantor Parties have guaranteed these Subordinated Notes on an unsecured senior basis. As of the Petition Date, there was approximately $401 million outstanding under the Subordinated Notes. (4) Foreign Debt While the majority of the Company's foreign operations are funded through Products, the foreign subsidiaries (all of which are non-debtors) have approximately $60 million of debt. Road to Bankruptcy According to Mr. Knoll, a series of recent developments have resulted in a reduction of the Company's liquidity position, thereby jeopardizing near-term payment obligations and threatening the Company's ability to continue to pursue necessary growth and development initiatives. A. Pressure from Customers The market share and overall production of the Company's largest North American customers has declined in recent years, Mr. Knoll relates. "Because the Company typically supplies its customers on a requirements basis, when the Company's customers decrease production, the volume of the Company's business simultaneously decreases. Given the Company's dependence on OEMs, competitive pressures on OEMs necessarily affect the Company." OEMs have responded to market pressures, in part, by asking their suppliers, including the Company, to lower prices. During the second half of 2004, certain of the OEM customers gave notice that they were terminating their accelerated payments programs for all of their suppliers. "The termination of these programs has had a material adverse impact on the Company's short-term liquidity position by pushing back the dates by which the Company receives future payment," Mr. Knoll says. The cash coming in the door slowed. Demands for Collins & Aikman's cash didn't. The Company was unable to fill the gap through new borrowings or additional advances under Receivables Facility. B. Pressure from Suppliers The Company is also feeling pressure from its suppliers, Mr. Knoll adds. The Company has experienced certain commodity price increases, including steel and oil. "This has hurt the Company because many of its supply contracts are for fixed prices that do not allow it to pass through increased material costs." C. Pressure from Competition The decline in overall sales, Mr. Knoll says, has had a corresponding effect on overcapacity in the automotive industry throughout the world. Certain of the Company's competitors have lowered their prices in an attempt to generate sales. "This situation has further increased pressure on the prices charged by the Company." D. The Company's Highly Leveraged Structure Is Restrictive Mr. Knoll relates that due to the combination of additional debt financing for its acquisitions and not achieving the expected benefits of the acquisitions as quickly as expected, the Company is now in an untenable position. The Company can't meet its obligations on its debt from its operations, and it cannot obtain the necessary additional capital to bridge the gap. Additionally, Mr. Knoll continues, the covenant restrictions in debt (and equity) instruments prevent the Company from raising additional capital to fund its operations. The Company needs available cash to finance additional capital investment. The Company is typically required to expend significant amounts of capital for engineering, development, tooling and other costs several years before it earns a return on its investment. Without financing flexibility, Mr. Knoll says, the Company will have difficulty maintaining its operations in the future. Mr. Knoll points out that there is constantly a need for capital investment considering the average useful life of a car is between seven to 10 years. E. Recent Market Forces Have Had Disastrous Implications "With its highly leveraged capital structure, the Company relied heavily on the Receivables Facility to generate cash for its operations," Mr. Knoll relates. Recently, the rating agencies downgraded the credit ratings of General Motors and Ford to "junk bond" status. The downgrade, Mr. Knoll says, had negative implications on the Company, including the Receivables Facility. "The Company simply could not operate outside of chapter 11." According to Mr. Knoll, the Company was able to negotiate waivers to the covenant that was breached as a result of the downgrade. But the downgrade had already triggered a series of events that, combined with the Company's well-publicized recent departure of a senior executive, culminated in the filing of the Chapter 11 cases. Mr. Knoll adds that the Company's trade credit was reduced effectively to "COD" terms (or no shipments without payment of past balances) in the days before the Petition Date. ----------------------------------------------------------------- [00002] COLLINS & AIKMAN'S BALANCE SHEET AT SEPTEMBER 30, 2004 ----------------------------------------------------------------- Collins & Aikman Corporation and Subsidiaries Condensed Consolidated Balance Sheets As of September 30, 2004 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $3,500,000 Accounts and other receivables, net of allowances of $6.4 and $9.2 255,100,000 Inventories 178,800,000 Other 217,100,000 Total current assets 654,500,000 Property, plant and equipment, net 806,000,000 Deferred tax assets 206,000,000 Goodwill 1,378,500,000 Intangible assets, net 45,700,000 Other assets 106,000,000 --------------- $3,196,700,000 =============== LIABILITIES AND COMMON STOCKHOLDERS' EQUITY Current Liabilities: Short-term borrowings $25,300,000 Current maturities of long-term debt and capital lease obligations 8,500,000 Accounts payable 636,300,000 Accrued expenses 225,100,000 --------------- Total current liabilities 895,200,000 Long-term debt and capital lease obligations 1,361,200,000 Mandatorily redeemable preferred stock of subsidiary 193,300,000 Other, including pensions and postretirement benefit obligation 404,600,000 Minority interest in consolidated subsidiary 2,300,000 --------------- Total liabilities 2,856,600,000 Common stock ($0.01 par value, 300.0 shares authorized, 83.6 shares issued and outstanding at September 30, 2004) 800,000 Other paid-in capital 1,282,300,000 Accumulated deficit (938,700,000) Accumulated other comprehensive loss (4,300,000) --------------- Total common stockholders' equity 340,100,000 --------------- $3,196,700,000 =============== ----------------------------------------------------------------- [00003] COMPANY'S PRESS RELEASE ANNOUNCING CHAPTER 11 FILING ----------------------------------------------------------------- Worldwide Operations Continue Without Interruption Company Obtains Commitment for $300 million in Debtor-in-Possession Financing TROY, Michigan -- Collins & Aikman Corporation (OTC Pink Sheets Quotation Service: CKCR) announced today that it and substantially all of its domestic subsidiaries have filed voluntary petitions to reorganize under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Eastern District of Michigan. The Company said the Chapter 11 filing was precipitated by mounting liquidity issues and the need for immediate cash to fund operations. In conjunction with the filing, the Company has received a commitment from JPMorgan Chase for up to $300 million in debtor-in-possession (DIP) financing, with an interim approval request of $150 million. Upon Court approval, the DIP financing, combined with the Company's cash from operations, is expected to provide sufficient liquidity to meet post-petition operating expenses, including supplier obligations and employee wages, salaries and benefits. The Company's worldwide operations are expected to continue in the normal course of business without interruption. Collins & Aikman said that it intends to use the Chapter 11 process to de-leverage its balance sheet and restore profitability. Charles Becker, acting chief executive officer of Collins & Aikman said, "We believe that this is the best course of action for our customers, employees, suppliers and other business partners. The protections afforded by the Chapter 11 process allow Collins & Aikman to gain immediate liquidity, continue operations in the ordinary course and focus on maximizing the value of the business. We expect to work diligently during the coming months to develop a restructuring plan that will allow the Company to emerge from Chapter 11 as a stronger, more competitive company that is well positioned for long-term success." None of the Company's affiliates outside of the U.S. were included in the filing. JPMorgan Chase has also agreed to provide funding under the DIP facility to support Collins & Aikman's non-U.S. operations, which is expected to provide the non-U.S. affiliates with sufficient liquidity going forward. Collins & Aikman also announced that it has retained Kroll Zolfo Cooper as its financial advisor and named John R. Boken of Kroll Zolfo Cooper as chief restructuring officer, effective upon filing the voluntary petition for Chapter 11 reorganization. Collins & Aikman has also retained Kirkland & Ellis LLP as its restructuring counsel and Lazard as its investment bank. Mr. Becker emphasized that the Company expects day-to-day operations to continue as usual during the Chapter 11 process. "We do not anticipate that customers and suppliers will experience a change in the way we do business with them," Mr. Becker said. "We have taken steps to make sure that suppliers get paid in full in the ordinary course of business for all goods and services provided after the filing date, and that customers continue to receive the same quality products to which they are accustomed." As a routine matter, Collins & Aikman is presenting its ongoing employee compensation and benefit programs to the Court for approval as part of the Company's "first day" motions. The Company anticipates that the Court will approve these requests, thereby ensuring that employees will be paid and that qualified benefit programs will continue without interruption or delay. "We greatly appreciate the ongoing support of the Company's customers, employees and suppliers," Mr. Becker said. "Their loyalty is critical to Collins & Aikman's success and integral to the future of the Company. The management team is committed to making this reorganization successful and leading Collins & Aikman towards a bright future. Customers, employees, suppliers and other business partners can look forward to a company that can grow and compete successfully." Additional information regarding the Chapter 11 reorganization is available on the Company's Web site, http://www.collinsaikman.com/ or by calling the Company's toll fee Reorganization Information Line at 1-866-795-7641 or for international callers 310-432-4170. Collins & Aikman Corporation, a Fortune 500 company, is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. Headquartered in Troy, Michigan, we have a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. Information about Collins & Aikman is available on the Internet at http://www.collinsaikman.com ----------------------------------------------------------------- [00004] COLLINS & AIKMAN CHAPTER 11 DATABASE ----------------------------------------------------------------- Lead Debtor: Collins & Aikman Corporation 250 Stephenson Highway Troy, Michigan 48083 Bankruptcy Case No.: 05-55927 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Collins & Aikman Canada Domestic Holding Company 05-55930 Collins & Aikman Products Company 05-55932 JPS Automotive, Inc. (dba PACJ, Inc.) 05-55935 Dura Convertible Systems, Inc. 05-55942 Collins & Aikman Development Company 05-55943 Owosso Thermal Forming, LLC 05-55946 Southwest Laminates, Inc. (dba Southwest Fabric Laminators Inc.) 05-55948 Amco Convertible Fabrics, Inc. 05-55949 Collins & Aikman International Corporation 05-55951 Collins & Aikman Accessory Mats, Inc. (fka the Akro Corporation) 05-55952 Collins & Aikman Automotive Interiors, Inc. (fka Textron Automotive Interiors, Inc.) 05-55956 Brut Plastics, Inc. 05-55957 Collins & Aikman Automotive Exteriors, Inc. (fka Textron Automotive Exteriors, Inc.) 05-55958 Collins & Aikman Asset Services, Inc. 05-55959 Collins & Aikman Plastics, Inc. 05-55960 Wickes Asset Management, Inc. 05-55962 Collins & Aikman Fabrics, Inc. (fka Joan Automotive Industries, Inc.) 05-55963 Collins & Aikman Properties, Inc. 05-55964 Collins & Aikman Automotive (Argentina), Inc. (fka Textron Automotive (Argentina), Inc.) 05-55965 Wickes Manufacturing Company 05-55968 Collins & Aikman Automotive Mats, LLC 05-55969 Collins & Aikman Interiors, Inc. 05-55970 Collins & Aikman Europe, Inc. 05-55971 Comet Acoustics, Inc. 05-55972 Gamble Development Company 05-55974 Collins & Aikman Intellimold, Inc. (fka M&C Advanced Processes, Inc.) 05-55976 Becker Group, LLC (dba Collins & Aikman Premier Mold) 05-55977 Collins & Aikman Automotive Overseas Investment, Inc. 05-55978 CW Management Corporation 05-55979 Collins & Aikman Automotive International, Inc. 05-55980 Collins & Aikman Automotive Services, LLC 05-55981 Collins & Aikman Carpet & Acoustics (MI), Inc. 05-55982 Collins & Aikman Carpet & Acoustics (TN), Inc. 05-55984 Collins & Aikman Automotive International Services, Inc. 05-55985 Collins & Aikman (Gibraltar) Limited 05-55989 Collins & Aikman Automotive (Asia), Inc. (fka Textron Automotive (Asia), Inc.) 05-55991 New Baltimore Holdings, LLC 05-55992 Type of Business: The Company is a supplier of automotive components, systems and modules to large vehicle manufacturers, including DaimlerChrysler AG, Ford Motor Company, Inc., Nissan Motor Company Unlimited, Porsche Cars GB, Renault Createur D' Automobiles, Toyota SA and Volkswagen AG. See http://www.collinsaikman.com/ Chapter 11 Petition Date: May 17, 2005 Court: United States Bankruptcy Court Eastern District of Michigan 211 West Fort Street Detroit, Michigan 48226 Judge: Chief Bankruptcy Judge Steven W. Rhodes Debtors' Counsel: Richard M. Cieri, Esq. Lisa G. Laukitis, Esq. Kirkland & Ellis LLP Citigroup Center 153 East 53rd Street New York, NY 10022-4611 Tel: (212) 446-4800 Fax: (212) 446-4900 -- and -- Ray C. Schrock, Esq. Marc J. Carmel, Esq. Kirkland & Ellis LLP 200 East Randolph Drive Chicago, Illinois 60601-6636 Tel: (312) 861-2413 Fax: (312) 861-2200 Debtors' Local Counsel: Joseph M. Fischer, Esq. Carson Fischer P.L.C. 300 E Maple Rd 3rd Floor Birmingham, MI 48009 Tel: (248) 644-4840 Fax: (248) 644-1832 Debtors' Communications Consultant: Sandra Sternberg Sitrick & Company 1840 Century Park East, Suite 800 Los Angeles, California 90067 -- and -- Steven Goldberg Sitrick & Company 655 Third Avenue, 22nd Floor New York, New York 10017 Debtors' Financial Advisors: Robert S. Kost Lazard Freres & Co. LLC 30 Rockefeller Plaza New York, New York 10020 Tel: (212) 632-1515 Fax: (212) 332-1784 Debtors' Restructuring Advisors: John Boken Kroll Zolfo Cooper 900 Third Avenue, 6th Floor New York, New York 10022 Debtors' Claims Agent: Kurtzman Carson Consultants LLC 12910 Culver Boulevard, Suite 1 Los Angeles, California 90066 Tel: (310) 823-9000 United States Trustee: U.S. Trustee for Region 9 Office of the U.S. Trustee 211 West Fort Street, Suite 700 Detroit, MI 48226 Consolidated Financial Condition as of September 30, 2004: Total Assets: $3,196,700,000 Total Debts: $2,856,600,000 ----------------------------------------------------------------- [00005] LIST OF COLLINS & AIKMAN'S 50-LARGEST UNSECURED CREDITORS ----------------------------------------------------------------- Entity Nature of Claim Claim Amount ------ --------------- ------------ 10-3/4% Senior Notes Due 2011 Senior Note $500,000,000 BNY Midwest Trust Company 2 North LaSalle St., Suite 1020 Chicago, IL 60602 Attn: Roxane Ellwalleger Tel: (312) 827-8500 12-7/8% Senior Senior $400,000,000 Subordinated Notes Subordinated Notes BNY Midwest Trust Company 2 North LaSalle St., Suite 1020 Chicago, IL 60602 Attn: Mary Callahan Tel: (312) 827-8500 Delphi Trade Debt $13,396,017 22954 Network Place Chicago, IL 60673-1229 Attn: Sharon Van Zeeland Tel: (248) 655-0842 Fax: (248) 655-8932 Brown Corporation Trade Debt $10,347,225 3441 Hidaway Rochester Hills, MI 48306-1453 Attn: Mark Ferderber Tel: (616) 527-4050 Fax: (616) 527-3385 Unifi Inc. Trade Debt $7,498,944 7201 West Friendly Avenue Greensboro, NC 27410-6237 Receiver General for Canada Trade Debt $5,471,901 700 Leight Capreol Dorval, Quebec H4Y 1G7 Canada Exxon Chemicals Trade Debt $4,150,807 13501 Katy Fairway Houston, TX 77079-1305 Attn: Paul Hanson Tel: (281) 584-7940 Fax: (281) 584-7946 Canada Customs & Rev Agency Trade Debt $3,374,942 Attn: Receiver General 1-5 Notre Avenue Sudbury, Ontario P3A 5C2 Canada Advance Composites Inc. Trade Debt $3,264,050 1062 South 4th Avenue Sidney, OH 45365-8977 Attn: Rob Morgan Tel: (248) 344-2879 Fax: (248) 465-0134 Nolan & Cunnings Inc. Trade Debt $3,187,651 28800 Mound Road Warren, MI 48092 Attn: Jonathan Vigliarola General Manager Patrick Coyne TRF Supervisor Tel: (586) 751-4670 ext. 118 & 104 Fax: (586) 851-4632 Dow Chemical Company Trade Debt $2,907,545 23030 Dow Center Midland, MI 48674-0001 Attn: David Breasseur Tel: (989) 636-0200 Fax: (989) 638-9852 Bayer Corporation Trade Debt $2,809,678 100 Bayer Road, Building 4 Pittsburgh, PA 15205-9707 Attn: Sam Stewart Tel: (248) 475-7702 Fax: (248) 377-9110 State of Michigan Trade Debt $2,591,837 430 West Allegan Street Lasing, MI 48918-0001 Invista Inc. Trade Debt $2,528,633 601 South LaSalle St., Suite 310 Chicago, IL 60605-1725 Corrflex Packaging LLC Trade Debt $2,283,458 [Address Not Provided] Unum Life Insurance Trade Debt $2,078,181 2211 Congress Street Portland, ME 04122-0002 Attn: Jess Tincher Tel: (704) 571-3638 Fax: (704) 571-3680 TG North America Corporation Trade Debt $2,068,953 1400 Stephenson Highway Troy, MI 48083 Attn: Raymond Soucie Tel: (248) 280-2100 Fax: (248) 280-2110 Progressive Moulded Products Trade Debt $2,022,626 9024 Keele Street Concord, Ontario L4K 2N2 Canada Attn: Dan Thiffault Tel: (905) 530-1633 Fax: (905) 760-3371 Southco Inc. Trade Debt $1,907,182 210 North Brinton Lake Road Concordville, PA 19331-9331 Attn: Lorraine Zinar Tel: (610) 361-6643 Fax: (610) 361-6082 Basf Corporation Trade Debt $1,896,085 1609 Biddle Avenue Wyandotte, MI 48192 Attn: Charlie Burrill Tel: (248) 650-9321 Fax: (248) 652-3634 Polyone Engineered Films Inc. Trade Debt $1,888,874 6915 Rochester, Suite 100 Troy, MI 48085 Attn: Dennis Ruen Tel: (248) 813-9380 ext. 19 Fax: (248) 813-9390 Dupont Company Trade Debt $1,841,064 1007 North Market Street Wilmington, DE 19898-0001 Attn: Scott Thomas Tel: (704) 586-7306 Revenue Canada Trade Debt $1,814,663 Ottawa Technology Centre 875 Heron Road Ottawa, Ontario K1A 9Z9 Canada Manpower Trade Debt $1,735,400 30800 Northwestern Highway Farmington Hills, MI 48334 Attn: C. Garland Waller Tel: (248) 538-1262 Fax: (248) 538-8916 Teknor Financial Corporation Trade Debt $1,697,939 P.O. Box 538308 Atlanta, GA 30353 Attn: Bruce B. Galletly Tel: (401) 725-8000 ext. 3185 Fax: (401) 725-5160 Meridian Magnesium Products Trade Debt $1,665,815 352 North Main Street, Suite 1 Plymouth, MI 48170-1270 Tel: (517) 663-2700 Fax: (517) 663-2714 Lake Erie Products Inc. Trade Debt $1,565,815 321 Foster Avenue Wood Dale, IL 60191 Attn: Lilia Roman Tel: (630) 595-6250 ext. 4649 Visteon Climate Control Trade Debt $1,532,753 3200 Greenfield Street Dearborn, MI 48120 Tel: (734) 710-8340 Janesville Products Trade Debt $1,310,973 2700 Patterson Avenue Grand Rapids, MI 49546 Attn: Laura Kelly Tel: (248) 625-7511 Fax: (248) 625-7442 Freudenberg Nok Inc. Trade Debt $1,256,097 1014 East Algonquin Road Suite 103 Schaumburg, IL 60173 Tel: (800) 533-5656 Select Industries Corporation Trade Debt $1,245,278 240 Detrick Street Dayton, OH 45404-1699 Attn: Christine Brown Tel: (937) 233-9191 Fax: (937) 233-7640 Pine River Plastics Inc. Trade Debt $1,225,329 1111 Fred W. Moore Highway Saint Clair, MI 48079-4967 Attn: Barb Krzywiecki Tel: (810) 329-8345 Fax: (810) 329-9388 Acord Inc. Trade Debt $1,206,563 2711 Product Drive Rochester Hills, MI 48309-3810 Attn: John Livingston Tel: (248) 852-6005 Fax: (248) 852-6074 Uniform Color Service Company Trade Debt $1,108,903 12003 Toepher Road Warren, MI 48089-3171 Attn: Randy Lueth Tel: (616) 494-7526 Fax: (800) 27-COLOR GE Polymerland Trade Debt $1,097,100 4920 South Monitor Avenue Chicago, IL 60638-1544 Health Alliance Medical Trade Debt $1,066,555 102 East Main Street, Suite 200 Urbana, IL 61801-2744 Atnn: Robena Vance Tel: (248) 443-1051 Fax: (248) 443-0090 ER Wagner Manufacturing Company Trade Debt $1,039,149 4611 North 32nd Street Milwaukee, WI 53209-6023 Attn: Gary Torke Tel: (414) 449-8235 Vari Form Inc. Trade Debt $1,011,264 12341 East 9 Mile Road Warren, MI 48089 Attn: Terry Nardone Tel: (586) 755-8938 Fax: (586) 598-4494 Unique Fabricating Inc. Trade Debt $1,005,689 800 Standard Parkway Auburn Hills, MI 48326-1415 Attn: Tom Tekieke Tel; (248) 853-2333 Inment Division of Multimatic Trade Debt $987,237 35 West Milmot Street Richmond Hill Ontario L4B 1L7 Fischer Automotive Systems Trade Debt $983,500 1084 Doris Road Auburn Hill, MI 48326-2613 Attn: William Stiefel Tel: (248) 276-1940 Fax: (248) 276-1942 ISP Elastomer Trade Debt $972,279 P.O. Box 4346 Houston, TX 77210 Attn: Tim Gorman Tel: (409) 724-8810 Fax: (409) 724-8713 Valeo Inc. Trade Debt $952,656 3000 University Drive Auburn Hills, MI 48326-2356 Attn: Jerry Ditrich Tel: (248) 340-3000 Colbond Inc. Trade Debt $912,436 1000 Abutment Road Dalton, GA 30721-4600 Attn: Don Brown Tel: (828) 665-5075 Fax: (828) 665-5005 Intertex World Resources Ltd. Trade Debt $900,444 500 Wedowee Street Bowdon, GA 30108-1541 Attn: Bill Weeks Tel: (770) 258-5551 Fax: (770) 258-3901 QRS 14 Paying Agent Trade Debt $884,281 50 Rockfeller LBBY2 New York, NY 10020-1605 Lear Corporation Trade Debt $812,617 21557 Telegraph Road Southfield, MI 48034-4248 Dayton Bag & Burlap Trade Debt $837,589 322 Davis Avenue Dayton, OH 45403-2910 Attn: Jeff Rutter Tel: (937) 258-8000 ext. 131 Valiant Tool & Mold Inc. Trade Debt $824,601 1511 East 14 Mile Road Troy, MI 48083-4621 Tel: (519) 251-4800 Fax: (519) 944-7748 Riverfront Plastic Products Trade Debt $821,444 780 Hillsdale Street Wyandotte, MI 48192-7120 Attn: George Tabry Tel: (734) 281-0440 Fax: (734) 281-4483 ----------------------------------------------------------------- [00006] S&P LOWERS COLLINS & AIKMAN'S RATINGS TO 'D' ----------------------------------------------------------------- NEW YORK, New York -- May 17, 2005 -- Standard & Poor's Ratings Services said today that it lowered its corporate credit rating on Troy, Mich.-based automotive parts supplier Collins & Aikman Corp. to 'D' from 'CCC-' following the company's Chapter 11 bankruptcy filing. At the same time, Standard & Poor's placed the recovery ratings on the senior secured bank facility on CreditWatch with developing implications. The '4' first-lien recovery rating could be raised if we believe lenders will receive more than 50% recovery, or lowered if recovery prospects are below 25%. If sufficient information is not available in the near term, Standard & Poor's will withdraw the recovery rating. "The bankruptcy filing was precipitated by very difficult conditions in the company's industry--reduced automotive production, increased raw material costs, credit downgrades of its key customers, and the termination of customers' accelerated payment programs--all of which have severely constrained Collins & Aikman's liquidity," said Standard & Poor's credit analyst Martin King. The downgrades of key customers have reduced the company's liquidity under a U.S. accounts receivable securitization facility. Collins & Aikman, a large supplier of automotive interior products, has total debt of about $2 billion. Collins & Aikman has received a commitment for a $330 million in debtor-in-possession financing, subject to court approval. Standard & Poor's will review any financials and restructuring plans that may become available to assess the impact on recovery prospects. Industry conditions for automotive suppliers have deteriorated during the past year. The vehicle production levels of two of the company's customers, Ford Motor Co. (BB????1) and General Motors Corp. (GM) (BB/Negative/B-1), declined 10% and 12%, respectively, in the first quarter of 2005. Both companies have cut production because of bloated inventory levels and market-share losses, especially for profitable sport utility vehicles (SUVs) and light trucks. The weak financial performance of auto manufacturers has led them to make very aggressive pricing demands of their suppliers in an attempt to reduce costs and improve financial performance. Auto suppliers have also had to absorb large increases in raw material costs. For the most part, auto manufacturers, particularly the domestic producers, have provided little to no raw material cost recovery to their supply base. ----------------------------------------------------------------- [00007] TEXTRON ASSESSING EXPOSURE TO COLLINS & AIKMAN BANKRUPTCY ----------------------------------------------------------------- PROVIDENCE, Rhode Island -- May 17, 2005 -- Textron Inc. (NYSE: TXT) announced that it is evaluating its exposure to the announced filing for bankruptcy protection by Collins and Aikman Corporation (C&A). Textron presently holds preferred stock of C&A associated with the 2001 sale of Textron's Automotive Trim business, which has a current carrying value of $39 million but will likely have limited value as a result of the bankruptcy. Textron also has about $64 million of lease financing with C&A and approximately $13 million of third-party guarantees for other C&A operating assets and miscellaneous contingent liability guarantees, both of which may be affected by the bankruptcy. The after-tax impact of potential charges would result in a reduction to Textron's previous GAAP earnings per share guidance. Textron Inc. is a $10 billion multi-industry company with 44,000 employees in 40 countries. The company leverages its global network of aircraft, industrial and finance businesses to provide customers with innovative solutions and services. Textron is known around the world for its powerful brands such as Bell Helicopter, Cessna Aircraft, Jacobsen, Kautex, Lycoming, E-Z-GO and Greenlee, among others. More information is available at http://www.textron.com/ ----------------------------------------------------------------- [00008] COLLINS & AIKMAN OWES UNIFI $8.2 MILLION ----------------------------------------------------------------- GREENSBORO, North Carolina -- May 18, 2005 -- Unifi, Inc. (NYSE: UFI) today announced the anticipated impact to the Company's fiscal fourth quarter results stemming from the voluntary petition to reorganize under Chapter 11 of the Bankruptcy Code filed today by Collins & Aikman Corp. Unifi supplies a wide range of polyester products for the automotive fabrics produced by Collins & Aikman. The Company reported that it is owed approximately $8.2 million by Collins & Aikman Corp., representing 6.4 percent of the Company's net receivables as of the close of its fiscal third quarter, which ended March 27, 2005. The Company anticipates taking a pre-tax charge to earnings for this amount during the current quarter, which will impact its EBITDA forecast for the fiscal year ending June 26, 2005. Unifi also announced that it expects to conduct business with Collins & Aikman during the Chapter 11 case and after they emerge from the reorganization process. "Collins & Aikman has been a valued partner throughout Unifi's history, and with proper and prudent safeguards in place, Unifi will support their day- to-day operations during the Chapter 11 process," said Bill Lowe, Chief Operating Officer and CFO for Unifi. "Although the impact on our fourth quarter results will be significant, the strength of our balance sheet will allow us to stay focused on our growth strategies, both domestically and globally." Unifi, Inc. (NYSE: UFI) is a diversified producer and processor of multi- filament polyester and nylon textured yarns and related raw materials. The Company adds value to the supply chain and enhances consumer demand for its products through the development and introduction of branded yarns that provide unique performance, comfort and aesthetic advantages. Key Unifi brands include, but are not limited to: Sorbtek(R), A.M.Y.(R), Mynx(TM) UV, Reflexx(R), MicroVista(R) and Satura(R). Unifi's yarns and brands are readily found in home furnishings, apparel, legwear and sewing thread, as well as industrial, automotive, military and medical applications. For more information about Unifi, visit http://www.unifi.com/ ----------------------------------------------------------------- [00009] DEBTORS' MOTION FOR AUTHORITY TO USE CASH COLLATERAL ----------------------------------------------------------------- Prior to the Petition Date, the Debtors borrowed money on a secured basis under a Credit Agreement, dated December 30, 2001, as amended and restated as of September 1, 2004, among Collins & Aikman Products Co., certain lenders and JPMorgan Chase Bank, N.A., as administrative agent. As of the Petition Date, the Debtors owed their Lenders $686,776,384 in respect of loans made and $61,223,616 in respect of letters of credit issued, exclusive of interest and fees. To secure repayment of their obligations, the Debtors granted their Lenders liens and security interests on all of their cash, proceeds, and cash equivalents. Because the Debtors filed for bankruptcy, absent court authority pursuant to 11 U.S.C. Sec. 363(c), the Debtors have no right to use their lenders' cash collateral. According to Jay B. Knoll, vice president of Collins & Aikman Corporation, the Debtors have an urgent need for the immediate use of their Lenders' Cash Collateral. "The Debtors require use of the Cash Collateral to, among other things, pay present operating expenses, including payroll and pay vendors on a going- forward basis to ensure a continued supply of materials essential to the Debtors' continued viability." By this motion, the Debtors seek the Court's authority to use Cash Collateral in which their Pre-Petition Secured Lenders have an interest and grant adequate protection to their Lenders with respect to the use of the Cash Collateral and all use and diminution in the value of the Collateral. As adequate protection, the Debtors propose to grant the Pre- Petition Agent a replacement security interest in and lien on all the collateral, subject and subordinate only to (i) the security interests and liens granted to postpetition lenders and (ii) the Carve-Out under a postpetition credit agreement. The Pre- Petition Agent and Lenders will also be granted a superpriority claim immediately junior to the claims held by postpetition lenders. The Debtors will pay in full, in cash to JPMorgan, as the Pre-Petition Agent: (1) on June 1, 2005, all accrued and unpaid interest on the Pre-Petition Debt at the non-default rate provided for in the Pre-Petition Credit Agreement; (2) upon interim approval of their request to obtain postpetition financing, all accrued and unpaid letter of credit fees, commitment fees, and all other prepetition fees owing; (3) promptly upon submission of invoices, all reasonable fees and expenses incurred to the extent payable or reimbursable; and (4) on the first business day of each month, all accrued but unpaid interest on the Prepetition Debt at the prevailing LIBOR rate. The Debtors propose to allow their prepetition lenders to retain expert consultants and financial advisors to monitor the Debtors' business and the value of the collateral. The Debtors will pay the fees and expenses of these consultants. The Debtors will provide JPMorgan with any written financial information or periodic reporting that is provided to their postpetition lenders. The Debtors will retain a chief restructuring officer reasonably satisfactory to JPMorgan. * * * Finding that the Debtors have an urgent need for fresh working capital financing to fund their day-to-day operating expenses, Judge Rhodes entered an Interim Cash Collateral Order authorizing the Debtors to use cash collateral securing repayment of the prepetition loans through the conclusion of a Final DIP Financing Hearing scheduled for June 20, 2005, at 10:00 a.m. ----------------------------------------------------------------- [00010] DEBTORS' MOTION TO OBTAIN $300,000,000 OF DIP FINANCING ----------------------------------------------------------------- Jay B. Knoll, vice president of Collins & Aikman Corporation, relates that the Debtors do not have sufficiently reliable liquidity sources available to ensure continued operations. The Debtors need to obtain postpetition financing to: -- permit the orderly continuation of their business, -- maintain business relationships with vendors, suppliers and customers, -- make payroll, -- make capital expenditures, and -- satisfy other working capital and operational needs. In the absence of postpetition financing, Mr. Knoll says, the Debtors could be compelled to curtail or even terminate their business operations to the material detriment of creditors, employees and other parties-in-interest. "Thus, the Debtors need to ensure that such working capital is available now." Prior to the Petition Date, the Debtors engaged in discussions with four potential lenders, including JPMorgan Chase Bank, N.A., with respect to postpetition financing. The Debtors received proposals from three of these lenders. The Debtors determined that JPMC's proposal was the most favorable, so they decided to accept JPMC's proposal. After good faith and extensive arm's-length negotiations, JPMC agreed to provide the Debtors up to $350 million of secured postpetition financing, on terms and subject to conditions set forth in a Revolving Credit, Term Loan and Guaranty Agreement, by and among Collins & Aikman Products Co., Collins & Aikman Corporation and certain of the domestic subsidiaries of Collins & Aikman Products as guarantors. A full-text copy of the 124-page Revolving Credit Agreement is available for free at: http://bankrupt.com/misc/collinscreditagreement.pdf By this motion, the Debtors seek the Court's authority to obtain postpetition financing on a joint and several basis, up to the aggregate principal amount of $300 million comprised of a revolving credit facility and a term loan: (a) Tranche A will be a revolving commitment of up to $200 million, of which a portion not in excess of $150 million will be available for the issuance of letters of credit; and (b) Tranche B will be a term loan commitment of up to $100 million. Borrowings must be repaid in full, and the Commitment will terminate, at the earliest of: -- 45 days after entry of the Interim DIP Order, if the Final DIP Order has not been entered prior to the expiration of that 45-day period; -- May 17, 2007; -- the substantial consummation of a confirmed plan of reorganization; and -- the acceleration of the DIP Loans and the termination of the Commitment. All of the Borrower's obligations will constitute allowed claims against the Debtors with priority over any and all administrative expenses and any and all other claims. The DIP Agent is granted a valid first priority senior security interest in and lien on all of the Debtors' property, including recoveries on account of any avoidance actions (e.g., preference claims and fraudulent conveyance recoveries) under Chapter 5 of the Bankruptcy Code or other applicable law. The Debtors agree that, without JP Morgan's consent, they will not make any payment on account of any reclamation claim nor will they return any inventory to any creditor for set-off against a pre-petition claim. The Debtors admit that all of their borrowings under the prepetition loan facility are fully secured by valid, perfected and enforceable liens. The Debtors make it clear they have no intention of attacking those liens. To the extent anybody else wants to, the Debtors ask the Bankruptcy Court to restrict the investigation period to 75 days and prohibit the company from paying more than $50,000 to fund that investigation. The superpriority claims and postpetition liens will be subject to a $7,000,000 Carve-Out for professionals fees and disbursements incurred, and the payment of fees required to be paid to the clerk of the Bankruptcy Court and to the office of the United States Trustee. Collins & Aikman Products will retain a restructuring chief executive officer reasonably satisfactory to the DIP Agent. The DIP Agreement also provides that: (a) The Commitment Fee is 1/2 of 1% per annum on the unused amount of the Commitment payable monthly in arrears during the term of the DIP Financing. (b) The Letter of Credit Fee is 2.5% per annum on the outstanding face amount of each Letter of Credit, plus certain customary fees, payable quarterly in arrears to the Issuing Lender for its own account. (c) The Interest Rate is JPMC's Alternate Base Rate plus 1.5% in the case of Tranche A Loans and 2.5% for Tranche B Loans. (d) Default Interest will be payable on demand at 2% above the then applicable rate. There are a number of conditions for the extension of credit. The DIP Credit Agreement contains customary events of default. By July 17, 2005, the Debtors will execute and delivered an amendment to the Credit Agreement agreeing to: (x) limits on Capital Expenditures during the chapter 11 restructuring; and (y) minimum Global and Domestic EBITDA targets on a month-by- month basis through May 2006. * * * Convinced that the Debtors will be irreparably harmed without immediate access to cash, Judge Rhodes permits the Debtors to enter into the DIP Documents. The Debtors are allowed to borrow and obtain letters of credit pursuant to the DIP Credit Agreement up to $150,000,000, with a $25,000,000 letter of credit sublimit to support their foreign and domestic operations, until entry of the Final DIP Order. The Debtors will return to Court on June 20, 2005, at 10:00 a.m., for a Final DIP Financing Hearing at which time they will ask Judge Rhodes for authority to borrow up to the full amount available under the DIP Financing Agreement. Peter Pantaleo, Esq., at Simpson Thacher & Bartlett, LLP, in New York, represents JP Morgan in this DIP financing transaction. Harold Novikoff, Esq., at Wachtell, Lipton, Rosen & Katz, in New York, represents JP Morgan in its role as the agent to Collins & Aikman's prepetition lenders. *** End of Issue No. 1 ***