================================================================= DANA CORPORATION BANKRUPTCY NEWS Issue Number 1 ----------------------------------------------------------------- Copyright 2006 (ISSN XXXX-XXXX) March 6, 2006 ----------------------------------------------------------------- Bankruptcy Creditors' Service, Inc. 215-945-7000 FAX 215-945-7001 ----------------------------------------------------------------- DANA CORPORATION 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 Carlo B. Fernandez, Christopher G. Patalinghug, Frauline S. Abangan and Peter A. Chapman, Editors. Subscription rate is US$45 per issue. Any re-mailing of DANA CORPORATION BANKRUPTCY NEWS is prohibited. ================================================================= IN THIS ISSUE ------------- [00000] HOW TO SUBSCRIBE TO DANA CORPORATION BANKRUPTCY NEWS [00001] BACKGROUND & DESCRIPTION OF DANA CORPORATION [00002] DANA CORPORATION'S BALANCE SHEET AS OF SEPTEMBER 30, 2005 [00003] COMPANY'S PRESS RELEASE ANNOUNCING CHAPTER 11 FILING [00004] DANA CORPORATION'S CHAPTER 11 DATABASE [00005] LIST OF DEBTORS' 50 LARGEST UNSECURED CREDITORS [00006] LIST OF DEBTORS' PUBLICLY HELD SECURITIES [00007] DEBTORS' MOTION FOR JOINT ADMINISTRATION OF CASES [00008] DEBTORS' MOTION TO PAY CRITICAL VENDORS CLAIMS [00009] DEBTORS' MOTION TO APPROVE $1.45 BIL. DIP FINANCING PACT [00010] COURT APPROVES DANA CORPORATION'S FIRST DAY MOTIONS [00011] U.S. TRUSTEE SETS ORGANIZATIONAL MEETING FOR MARCH 10 [00012] FITCH LOWERS DANA CORP.'S ISSUER DEFAULT RATING TO C [00013] MISSED INTEREST PAYMENTS CUE MOODY'S TO JUNK DANA RATINGS [00014] S&P CUTS DANA CORP.'S RATING TO D POST-BANKRUPTCY [00015] DBRS CUTS DANA CORP.'S LOAN & BOND RATINGS TO D [00016] NYSE SUSPENDS TRADING & MOVES TO DELIST DANA CORP. KEY DATE CALENDAR ----------------- 03/03/06 Voluntary Petition Date 03/10/06 Organizational Meeting to Form Creditors' Committees 03/18/06 Deadline to File Schedules of Assets & Liabilities 03/18/06 Deadline to File Statements of Financial Affairs 03/18/06 Deadline to File Lists of Leases and Contracts 04/02/06 Deadline to Provide Utilities With Adequate Assurance 06/01/06 Deadline to remove actions under FRBP 9027 07/01/06 Deadline to make decisions about lease depositions 07/01/06 Expiration of Exclusive Plan Proposal Period 08/30/06 Expiration of Exclusive Solicitation Period 03/02/08 Deadline to Commence Avoidance Actions First Meeting of Creditors under 11 USC Sec. 341 Bar Date for filing Proofs of Claim ----------------------------------------------------------------- [00000] HOW TO SUBSCRIBE TO DANA CORPORATION BANKRUPTCY NEWS ----------------------------------------------------------------- DANA CORPORATION 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 DANA CORPORATION 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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Name: ---------------------------------------------- Firm: ---------------------------------------------- Address: ---------------------------------------------- ---------------------------------------------- Phone: ---------------------------------------------- Fax: ---------------------------------------------- E-Mail: ---------------------------------------------- (Distribution to multiple professionals at the same firm is provided at no additional cost.) DANA CORPORATION 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 DANA CORPORATION 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 DANA CORPORATION ----------------------------------------------------------------- Dana Corporation 4500 Dorr Street Toledo, Ohio 43615 Telephone (419) 535-4500 Fax (419) 535-4643 http://www.dana.com/ Dana Corporation was founded in 1904 by Clarence Spicer. Based on Mr. Spicer's design of the first practical universal joint to power an automobile, the Dana Companies' products have helped drive a wide array of vehicles, from the Model T and the World War II-era Jeep, to London taxicabs, 18-wheel rigs, earth-moving machines and cars on the NASCAR racing circuit. The Dana Companies manufacture and sell their products under many patents obtained over many years under several well-known trademarks, including Spicer(R), Victor Reinz(R), Perfect Circle(R) and Clevite(R). With 2004 worldwide sales of approximately $9 billion, the Dana Companies together comprise one of the world's largest independent suppliers of modules, systems and components for original equipment manufacturers of light, commercial and off- highway vehicles and for related aftermarket customers. Dana's largest customers are: * AGCO Corporation * AM General Corporation * Blue Diamond Truck Company LLC * BMW * Brake Parts, Inc. * Caterpillar, Inc. * DaimlerChrysler AG * Detroit Diesel Corp. * Engineered Machine Products * Ford Motor Company * Ford Motor Company of Canada * Freightliner LLC * General Motors of Canada * General Motors Corporation * General Motors de Mexico * Genuine Parts Co. * IC Corporation * International Truck & Engine * Isuzu * John Deere * Mack Trucks, Inc. * Manitou BF * Navistar * New United Motor Mfg., Inc. * Nissan North America, Inc. * PACCAR Inc. * PACCAR of Canada * PSA Peugeot Citron * Renault-Nissan * Sandvik SMC Distribution * Toyota Motor Manufacturing USA * TRW Automotive US, LLC * Volkswagen * Volvo Truck The Dana Companies are comprised of 316 corporate entities, of which: (a) 109 are direct or indirect domestic subsidiaries; and (b) 205 are direct or indirect foreign subsidiaries. An organizational chart showing Dana's Corporate Structure is available for free at: http://bankrupt.com/misc/dana_corporatestructure.pdf Michael J. Burns, chairman of the board, president, chief executive officer, and chief operating officer of Dana Corporation, relates that the Dana Companies have developed longstanding business relationships with thousands of customers worldwide, including nearly every major global vehicular OEM. Ford Motor Company and General Motors Corporation together accounted about 36% of the Dana Companies' consolidated sales in 2004. According to Mr. Burns, the Dana Companies maintain administrative organizations in four regions -- North America, Europe, South America and Asia Pacific. The Dana Companies have 250 manufacturing facilities, distribution centers, sales branches and other offices and facilities worldwide, including business locations in approximately 25 states, Mexico, Canada, 11 countries in Europe and 14 countries elsewhere in the world. As of March 3, 2006, the Dana Companies employed 44,000 people globally, of which 19,000 employees operate within the United States. Approximately 7,200 of these U.S.-based employees are represented by unions. Business Segments The Dana Companies operate primarily through two business units: Automotive Systems Group ------------------------ The ASG is one of the primary independent suppliers in torque and traction technologies, structural solutions, engine and fluid management and system integration technologies. Among other things, the ASG manufactures and sells: (a) modules, systems and components, consisting of axles, driveshafts, structures and chassis and steering products, for the automotive and light vehicle markets; (b) driveshafts for the commercial vehicle market; and (c) sealing, thermal management, fluid transfer and engine power products for the automotive, light and commercial vehicle and leisure and outdoor power equipment markets. The ASG also provides systems assembly, management and integration services and related service parts. The combined ASG operations produce components for the light vehicle OEM market. In 2004, the ASG generated worldwide sales of approximately $6.8 billion, and it generated approximately $5.5 billion in sales for the nine-month period ending on September 30, 2005. The largest customers of the ASG business are Ford, GM and DaimlerChrysler AG. Currently, the ASG has 191 facilities, operates in 19 countries and employs 32,500 people worldwide. Heavy Vehicle Technologies and Systems Group -------------------------------------------- The HVTSG manufactures and sells: (a) axles, brakes, driveshafts, chassis and suspension modules, ride controls and related modules and systems for the commercial and off-highway vehicle markets; and (b) transaxles, transmissions and electronic controls for the off-highway market. In 2004, the HVTSG generated worldwide sales of approximately $2.3 billion, and it generated approximately $2 billion in sales for the nine-month period ending on September 30, 2005. The largest customers of the HVTSG business are PACCAR, Inc., Volvo Group and International Truck & Engine Corporation. Currently, the HVTSG has 32 facilities. Dana Credit Corporation In addition, Mr. Burns says, for nearly two decades, Dana was a leading provider of lease financing services in selected markets through its wholly owned, non-debtor subsidiary, Dana Credit Corporation. In October 2001, Dana decided to wind down DCC's businesses in order to focus on its core businesses. Over the past three years, Dana has sold significant portions of DCC and reduced the total portfolio of assets from approximately $2.2 billion at the end of 2001 to approximately $605 million at the end of 2005. Dana's Significant Indebtedness As of March 1, 2006, Dana had $2.6 billion in outstanding debt, of which $730,000,000 was secured debt and $1.87 billion was unsecured debt. Dana's debt obligations consist primarily of: A. The Five-Year Revolving Credit Facility Under the March 5, 2005, credit facility, Citicorp. USA, Inc., serves as administrative agent, Deutsche Bank Securities, Inc., and Bank of America N.A., as syndication agents, JPMorgan Chase Bank N.A., and SunTrust Bank, as documentation agents; and Citigroup Global Markets, Inc., as lead arranger and book manager for a consortium of lenders. It is a $400,000,000 revolving credit facility. As of March 3, 2006, borrowings totaled $377,000,000. B. Accounts Receivable Securitization Program The U.S. Receivables Program is designed to help meet Dana's periodic demands for short-term financing. It provides for up to $275,000,000 in borrowings. As of February 28, 2006, borrowings totaled $225,000,000. That facility is funded and managed by Blue Ridge Asset Funding Corporation, Falcon Asset Securitization Corporation, JPMorgan Chase, N.A., and Wachovia Bank, N.A. C. Purchasing Card Obligations Dana funds many of its day-to-day purchases through a U.S. purchasing card program issued by Citibank USA, N.A. As of March 3, 2006, the outstanding obligations for advances under the P-Card Program totaled approximately $10,000,000. D. Tooling Finance Program Dana, as guarantor, entered into a Tooling Finance Agreement, dated August 19, 2005, with LaSalle Bank National Association, as lender. Borrowings were made to suppliers of Dana to assist in the financing of tools, jigs and fixtures; gauges; assembly equipment; molds and dies to be supplied by a Tooling Borrower to an OEM in connection with the production of certain of Dana's products, pursuant to a purchase order. Although Dana has stopped participating in this program, it has remaining contingent liabilities totaling $2,100,000. E. Unsecured Notes Wilmington Trust Company is the trustee under four indenture agreements, pursuant to which Dana has issued multiple series of fixed rate unsecured notes. As of March 3, 2006, the total amount outstanding under the Unsecured Notes was approximately $1,633,993,211. F. Trade Debt As of March 3, 2006, Dana estimates it owes $550,000,000 in trade debt. G. Other Liabilities Dana has significant contingent liabilities, including potential liabilities relating to: (a) alleged claims relating to: -- asbestos exposure, -- other products liability, -- environmental damage, and -- violations of the Securities Exchange Act; and (b) pension and retirement liabilities. Dana has accounted for certain of the Claims, in its Form 10-Q for the quarter ended Sept. 30, 2005: (a) an accrual of $112,000,000 for indemnity and defense costs for pending asbestos-related product liability claims, (b) an accrual of approximately $70,000,000 for future asbestos-related product liability, (c) an accrual of $13,000,000 for contingent non- asbestos product liability claims, and (d) an accrual of $66,000,000 for contingent environmental claims. Road to Bankruptcy According to Mr. Burns, several external factors have severely impacted Dana's operations and financial performance. Among other things, Dana has been faced with: (a) a continued decline in the market share of Dana's largest customers, which has resulted in declining sales by Dana and increased pricing pressures by the OEMs; (b) continued high commodity prices, including costs for steel and other raw materials; (c) rising energy costs; (d) the tightening of available trade debt; (e) increased cost of capital; and (f) global economic factors. Dana's two largest customers, Ford and GM, have steadily lost market share to foreign competitors. As a result, Ford and GM have been forced to close plants, lay off workers, and implement other cost cutting measures, including a significant reduction in purchases and inventory levels. The OEMs have exerted increased pricing pressures on, and obtained other concessions from, Dana. Increasing fuel costs also have increased the Debtors' costs for energy to operate its facilities, Mr. Burns adds. Moreover, Mr. Burns continues, Dana tried to pursue several out- of-court alternatives, including a major effort to refinance certain prepetition secured debt and add working capital availability, but was not able to conclude these efforts within the necessary timeframe. Mr. Burns points out that not only Dana was affected by these factors, but also its suppliers and competitors, including Delphi Corporation; Tower Automotive, Inc.; Collins & Aikman Corporation; and Meridian Automotive Systems, Inc. -- all of which recently have filed for chapter 11 protection. Dana believes that Chapter 11 will provide the Company access to the necessary capital to implement its business plan and complete the restructuring of its operations. "The goal of this process will be the development of a business plan that will re-engineer and streamline the Dana Companies' capital and corporate structures and operations to position them to compete successfully in the global automotive and heavy vehicle markets while continuing to provide superior products and service to our valued customers," he says. Dana's non-U.S. subsidiaries and affiliates are not seeking relief under Chapter 11 of the U.S. Bankruptcy Code or any other insolvency laws. Mr. Burns relates that Dana's foreign companies are separate legal entities under the direction of local management with global management oversight and are generally distinct from the U.S. operations. "Generally, Dana's non-U.S. businesses are competitive with their peers, have positive cash flow and are experiencing growth opportunities." 30-Day Cash Budget Over the next 30 days, Dana estimates that cash disbursements will exceed cash receipts: Dana Corporation Projected Cash Receipts & Disbursements For the 30-Day Period ending April 2, 2006 Projected Cash Receipts $270,400,000 Projected Cash Disbursements $552,100,000 ------------- Projected Net Cash Loss ($281,700,000) At April 2, 2006, Dana Corp. anticipates that its balance sheet will show $2,471,000,000 in Unpaid Obligations and that Unpaid Receivables will total $688,400,000. ----------------------------------------------------------------- [00002] DANA CORPORATION'S BALANCE SHEET AS OF SEPTEMBER 30, 2005 ----------------------------------------------------------------- DANA CORPORATION Unaudited Consolidated Balance Sheet As of September 30, 2005 ASSETS Current assets Cash and cash equivalents $730,000,000 Accounts receivable Trade 1,454,000,000 Other 274,000,000 Inventories Raw materials 280,000,000 Work in process and finished goods 598,000,000 Other current assets 146,000,000 --------------- Total current assets 3,482,000,000 Property, plant and equipment, net 1,742,000,000 Investments in leases 256,000,000 Investments and other assets 2,397,000,000 --------------- Total assets $7,877,000,000 =============== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Notes payable, including current portion of long-term debt $2,304,000,000 Accounts payable 1,322,000,000 Other current liabilities 1,082,000,000 --------------- Total current liabilities 4,708,000,000 Long-term debt 280,000,000 Deferred employee benefits and other noncurrent liabilities 1,747,000,000 Minority interest in consolidated subsidiaries 85,000,000 Shareholders' equity 1,057,000,000 --------------- Total liabilities and shareholders' equity $7,877,000,000 =============== ----------------------------------------------------------------- [00003] COMPANY'S PRESS RELEASE ANNOUNCING CHAPTER 11 FILING ----------------------------------------------------------------- Dana Corporation's U.S. Operations File for Chapter 11 Reorganization to Address Financial & Operational Challenges All Dana Facilities Open, Normal Operations Continue Company Obtains $1.45 Billion DIP Financing Commitment from Bank Group TOLEDO, Ohio -- March 3, 2006 -- Dana Corporation (NYSE: DCN) announced today that in order to address financial and operational challenges that have hampered its performance, the company and 40 of its U.S. subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Dana's European, South American, Asia-Pacific, Canadian and Mexican subsidiaries are not included in the Chapter 11 filing and are operating as normal. The filings were made today in the U.S. Bankruptcy Court for the Southern District of New York. Company Obtains $1.45-Bil. DIP Financing Commitment To fund its continuing operations during the restructuring, Dana has secured a $1.45 billion debtor-in-possession (DIP) financing facility from Citigroup, Bank of America, N.A., and JP Morgan Chase Bank, N.A. Subject to court approval, the DIP credit facility, which replaces the company's previous $400 million revolving credit facility and $275 million receivables securitization facility, will be used for the company's normal working capital requirements, including employee wages and benefits, supplier payments, and other operating expenses during the reorganization process. Dana has faced a continued decline in revenues resulting from the decreasing market share and production levels of its largest domestic customers, along with sharp increases in commodity and energy prices that have outpaced the cost savings Dana has been able to achieve. The general financial condition of the industry, together with Dana's inability to renew or expand its credit facilities in a timely manner, has significantly constrained Dana's liquidity. As a result, the company concluded, after thorough consultation with its advisors, that its interests and the interests of its creditors, employees, customers, suppliers, and the communities in which it operates would be best served by reorganizing under Chapter 11 of the U.S. Bankruptcy Code. A Necessary and Responsible Step to Achieve a Stable and Profitable Future Dana Chairman and Chief Executive Officer Michael J. Burns said, "The Chapter 11 process provides the company an opportunity to fix our business comprehensively -- financially and operationally. This will be fundamental change, not just incremental improvement. The Chapter 11 process allows us to continue normal business operations, while we restructure our debt and other obligations and enhance performance. "We want to assure everyone -- our customers, suppliers, our people and our communities -- that Dana is open for business as usual," he added. "And, to this end, our customers can continue to rely on Dana for quality products -- delivered on time and to best-in-class specification. "This is an extremely difficult, but necessary and responsible decision that will provide us with the time and opportunity to strengthen our performance and achieve a sustained turnaround at Dana." Mr. Burns said Dana intends to proceed with its previously announced divestiture and restructuring plans, which include the sale of several non-core businesses and the closure of several facilities and shift of production to lower-cost locations. In addition, Dana will continue to take steps to reduce costs, increase efficiency, and enhance productivity, he said. Company Files First-Day Motions to Support Key Stakeholders Dana has filed "First-Day Motions" in the Bankruptcy Court in New York designed to ensure that the company's business continues to function without disruption. The court filings are intended to ensure that the company can continue to pay its employees and suppliers and maintain uninterrupted delivery of products and services to its customers. Further Information Dana reported total assets of approximately $7.9 billion and total [current] liabilities of approximately $4.7 billion, on a consolidated basis, as of September 30, 2005. Dana's legal advisor in the Chapter 11 filing is Jones Day. The company's financial advisor is Miller Buckfire and restructuring advisor is AlixPartners. More information about Dana's filings is available on the company's Web site at: http://www.dana.com/ About Dana Corporation Dana people design and manufacture products for every major vehicle producer in the world. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. A leading supplier of drivetrain, chassis, structural, and engine technologies, Dana employs 46,000 people in 28 countries. Based in Toledo, Ohio, the company reported sales of $9 billion in 2004. Dana's Internet address is: http://www.dana.com/ ----------------------------------------------------------------- [00004] DANA CORPORATION'S CHAPTER 11 DATABASE ----------------------------------------------------------------- Lead Debtor: Dana Corporation 4500 Dorr Street Toledo, Ohio 43615 Bankruptcy Case No.: 06-10354 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Dakota New York Corp. 06-10351 Brake Systems, Inc. 06-10355 BWDAC, Inc. 06-10357 Coupled Products, Inc. 06-10359 Dana Atlantic LLC 06-10360 Dana Automotive Aftermarket, Inc. 06-10362 Dana Brazil Holdings I LLC 06-10363 Dana Brazil Holdings LLC 06-10364 Dana Information Technology LLC 06-10365 Dana International Finance, Inc. 06-10366 Dana International Holdings, Inc. 06-10367 Dana Risk Management Services, Inc. 06-10368 Dana Technology Inc. 06-10369 Dana World Trade Corporation 06-10370 Dandorr L.L.C. 06-10371 Dorr Leasing Corporation 06-10372 DTF Trucking, Inc. 06-10373 Echlin-Ponce, Inc. 06-10374 EFMG LLC 06-10375 EPE, Inc. 06-10376 ERS LLC 06-10377 Flight Operations, Inc. 06-10378 Friction Inc. 06-10379 Friction Materials, Inc. 06-10380 Glacier Vandervell Inc. 06-10381 Hose & Tubing Products, Inc. 06-10382 Lipe Corporation 06-10383 Long Automotive LLC 06-10384 Long Cooling LLC 06-10385 Long USA LLC 06-10386 Midland Brake, Inc. 06-10387 Prattville Manufacturing, Inc. 06-10388 Reinz Wisconsin Gasket LLC 06-10390 Spicer Heavy Axle & Brake, Inc. 06-10391 Spicer Heavy Axle Holdings, Inc. 06-10392 Spicer Outdoor Power Equipment Components LLC 06-10393 Torque-Traction Integration Technologies, LLC 06-10394 Torque-Traction Manufacturing Technologies, LLC 06-10395 Torque-Traction Technologies, LLC 06-10396 United Brake Systems Inc. 06-10397 Chapter 11 Petition Date: March 3, 2006 Court: United States Bankruptcy Court Southern District of New York Alexander Hamilton Customs House One Bowling Green New York, NY 10004-1408 Telephone (212) 668-2870 Judge: The Honorable Burton R. Lifland Debtors' Counsel: Corinne Ball, Esq. Richard H. Engman, Esq. JONES DAY 222 East 41st Street New York, NY 10017 Telephone (212) 326-3939 Fax (212) 755-7306 - and - Heather Lennox, Esq. Carl E. Black, Esq. Ryan T. Routh, Esq. JONES DAY North Point 901 Lakeside Avenue Cleveland, OH 44114 Telephone (216) 586-3939 Fax (216) 579-0212 - and - Jeffrey B. Ellman, Esq. JONES DAY 1420 Peachtree Street, N.E., Suite 800 Atlanta, Georgia 30309-3053 Telephone (404) 581-8309 Fax (404) 581-8330 Debtors' Special Corporate Counsel: Allen C. Goolsby, III, Esq. William M. Richardson, Esq. HUNTON & WILLIAMS LLP Riverfront Plaza, East Tower 951 East Byrd Street Richmond, Virginia 23219-4074 Telephone (804) 788-8200 Fax (804) 788-8218 - and - Joseph J. Saltarelli, Esq. HUNTON & WILLIAMS LLP 200 Park Avenue New York, New York 10166-0136 Telephone (212) 309-1000 Fax (212) 309-1100 Debtors' Special Securities and Litigation Counsel: Katten Muchin & Rosenman LLP Debtors' Special International Counsel: Dorsey & Whitney LLP Special Counsel to the Audit Committee of Dana Corporation's Board of Directors: Skadden, Arps, Slate, Meagher & Flom LLP Debtors' Financial Advisor and Investment Banker: Henry S. Miller MILLER BUCKFIRE & CO., LLC 250 Park Avenue, 19th Floor New York, NY 10177 Debtors' Crisis Manager and Chief Restructuring Officer: Ted Stenger AP SERVICES, LLC (an affiliate of AlixPartners, LLC) 2000 Town Center, Suite 2400 Southfield, MI 48075 Telephone (248) 358-4420 Fax (248) 358-1969 Debtors' Independent Auditors: PricewaterhouseCoopers LLP Debtors' Tax Advisors and Accountants: Ernst & Young LLP Debtors' Claims, Noticing and Balloting Agent: The BMC Group, Inc. Counsel for Prepetition and Postpetition Secured Lenders: John J. Madden, Esq. SHEARMAN & STERLING LLP 599 Lexington Avenue New York, NY 10022 Telephone (212) 848-4000 Fax (212) 848-7179 Counsel for Program Agent for the Prepetition Accounts Receivable Securitization Facility: Nancy L. Schimmel, Esq. LATHAM & WATKINS Sears Tower, Suite 5800 233 South Wacker Drive Chicago, IL 60606 Telephone (312) 876-7618 Fax (312) 993-9767 United States Trustee: Deirdre A. Martini United States Trustee for Region 2 33 Whitehall Street, 21st Floor New York, NY 10004 Telephone (212) 510-0500 Fax (212) 668-2256 Counsel for the U.S. Trustee: Greg M. Zipes, Esq. Office of the United States Trustee 33 Whitehall Street, 21st Floor New York, NY 10004 Telephone (212) 510-0500 Fax (212) 668-2256 Financial Condition as of September 30, 2005: Total Assets: $7,900,000,000 Total Debts: $6,800,000,000 ----------------------------------------------------------------- [00005] LIST OF DEBTORS' 50 LARGEST UNSECURED CREDITORS ----------------------------------------------------------------- Entity Nature of Claim Claim Amount ------ --------------- ------------ Wilmington Trust Company 5.85% Notes $466,672,500 Rodney Square North due 2015 1100 North Market Street Wilmington, DE 19890 Attn: Corporate Trust Admin. Tel: (302) 636-6396 Fax: (302) 636-4145 Wilmington Trust Company 6.5% Notes $361,501,389 due 2009 Wilmington Trust Company 7% Notes $277,743,069 due 2029 Wilmington Trust Company 7% Notes $170,441,634 due 2028 Wilmington Trust Company 6.5% Notes $154,550,000 due 2008 Wilmington Trust Company 9% Dollar- $116,148,326 denominated Notes due 2011 Wilmington Trust Company 10.125% Notes $78,279,843 due 2010 TRW Fremont Kingsway Trade Debt $10,417,624 128 River Bend Drive Sevierville, TN 37876-1942 Attn: Bob Swan Tel: (865) 453-0199 Fax: (865) 453-0429 Metaldyne Co. LLC Trade Debt $9,874,190 47659 Halyard Drive Plymouth, MI 48170 Attn: Timothy Liuliette Tel: (734) 207-6200 Fax: (734) 207-6500 Toyota Tsusho America Inc. Trade Debt $9,142,204 437 Madison Avenue, 29th Floor New York, NY 10022 Attn: Takashi Hasegawa Tel: (212) 418-0100 Fax: (212) 418-0117 Wilmington Trust Company 9% Euro- $8,656,450 denominated Notes due 2011 US Manufacturing Corp Buena Trade Debt $7,889,021 104 North Main Street Drive New Providence, LA 50206 Attn: Loran Balvanze Tel: (641) 497-5260 Fax: (641) 939-7539 Bruckner Supply Co., Inc. Trade Debt $5,533,014 c/o Wesco Receivables P.O. Box 64256S Pittsburgh, PA 15264-2565 Attn: Ron Haley Tel: (412) 3934614 Fax: (412) 393-8831 Timken Co. Trade Debt $5,190,986 59 Field Street Torrington, CT 06790-4942 Attn: Jacqueline Dado Tel: (330) 438-3000 Fax: (330) 471-4388 Sypris Technologies Trade Debt $4,831,382 2820 West Broadway Louisville, KY 40211-1219 Attn: Jack Kramer Tel: (502) 774-6011 Fax: (502) 774-6300 NTN Bearing Corp. of America Trade Debt $4,791,090 600 East Bishop Court Mount Prospect, IL 60056-7604 Attn: Rick Thomas Tel: (847) 298-7500 Fax: (847) 699-9744 Nova Tube Indiana LLC Trade Debt $4,230,748 1195 Port Road Jeffersonville, IN 47130-8478 Tel: (812) 285-9796 Fax: (812) 285-8832 Toyoda Machinery USA Inc. Trade Debt $3,685,086 5932 Commerce Blvd. Morristown, TN 37514-2941 Attn: Toshi Hirokawa Tel: (423) 585-0999 Fax: (423) 585-2502 Robert Bosch Corporation Trade Debt $3,417,595 38000 Hills Tech Dr. Farmington Hills, MI 48331 Attn: Kurt Liedtke Tel: (248) 553-9000 Fax: (248) 398-1434 Rex Forge Division Trade Debt $3,378,717 355 Atwater Street Plantsville, CT 06479-1653 Attn: Ronald Fontanella Tel: (860) 628-0393 Fax: (860) 621-8971 Macsteel Trade Debt $3,297,315 333 Westchester Ave. White Plains, NY 10604-2910 Attn: Salvatore Purpura Tel: (914) 872-2700 Fax: (914) 872-2722 Westport Axle Corp. Trade Debt $2,634,737 12740 Westport Road, Suite H Louisville, KY 40245-2121 Attn: Alexander Van Leyen Tel: (502) 425-2103 Fax: (502) 425-2508 Eaton Corporation Trade Debt $2,596,862 10221 Capital Street Oak Park, MI 48237-3103 Attn: Rod Machek Tel: 800-527-3851 Fax: 248-398-1434 Goodyear Tire & Rubber Co. Trade Debt $2,262,033 1144 East Market Street Akron, OH 44316-0001 Attn: Robert Keegan Tel: (330) 796-2121 Fax: (330) 796-2222 Worthington Steel Company Trade Debt $2,210,185 100 Worthington Drive Porter, IN 46304-8812 Attn: Donal Malenick Tel: (219) 929-4000 Fax: (614) 438-3256 AFC Holocroftald Trade Debt $2,174,000 49630 Pontiac Trail Wixom, MI 48393 Attn: Karl Heinz Tel: (248) 668-4016 Fax: (248) 624-3710 Koyo Corp USA Trade Debt $2,005,143 29570 Clemens Road Westlake, OH 44145-1007 Attn: Tsutomu Nemoto Tel: (440) 835-1000 Fax: (440) 835-9347 Advanced Systems & Controls Inc. Trade Debt $1,967,636 23426 Reynolds Court Clinton Township, MI 48036-1240 Attn: Andrew Zundel Tel: (586) 468-5200 Fax: (586) 816-4558 Federal Mogul Corporation Trade Debt $1,925,215 26555 Northwestern Highway Southfield, MI 48034 Attn: Jose Maria Alapont Tel: (248) 354-7700 Fax: (248) 354-8950 Wayne Manufacturing Corp. Trade Debt $1,921,704 6505 State Road 205 Laotto, IN 46763-9618 Attn: Ron Dickerhoof Tel: (260) 637-5586 Fax: (260) 357-4193 Cannon Automotive Solutions Trade Debt $1,858,812 Division of Electromac Group 1965 Ambassador Drive Windsor, Ontario N9C 3R5 CANADA Attn: Richard A. Buccarelli Tel: (519) 969-0305 Fax: (519) 969-1437 Mercer Forge Corp. Trade Debt $1,818,056 200 Brown Street Mercer, PA 16137 Attn: James Ackerman Tel: (724) 662-2750 Fax: (724) 662-5642 Wanxiang America Corporation Trade Debt $1,779,050 88 Airport Road Elgin, IL, 60123-9324 Attn: Pin Ni Tel: (847) 622-8838 Fax: (847) 931-4838 Bearing Technologies Trade Debt $1,705,867 1141 Jaycox Road Avon, OH 44011-1366 Attn: Laszlo Tromler Tel: (440) 937-4770 Fax: (440) 937-4771 Excel Polymers LLC Trade Debt $1,686,317 6521 David Industrial Parkway Solon, OH 44139-3549 Attn: Vic March Tel: (440) 715-7000 Fax: (440) 715-7012 Brunner International Inc. Trade Debt $1,662,958 3959 Bates Road Medina, NY 14103-9705 Attn: Peter Brunner Tel: 585-798-6000 Fax: 585-356-8885 Toyoda Koki Automotive Torsen NA Trade Debt $1,623,086 Two Jetview Drive Rochester, NY 14624 Attn: Toshi Hirokawa Tel: (423) 585-0999 Fax: (423) 585-2502 Akebono Corporation Trade Debt $1,617,933 34355 West Twelve Mile Road Farmington Hills, MI 48331 Attn: Kevin J. Adler Tel: (248) 489-7400 Fax: (248) 994-7901 Acemco Automotive Trade Debt $1,610,840 7297 Enterprise Drive Spring Lake, MI 48456-9695 Attn: Jim Scott Tel: (231) 799-8612 Fax: (231) 799-9904 Parker Hannifin Corporation Trade Debt $1,606,403 6035 Parkland Boulevard Cleveland, OH 44124-4141 Attn: Donald Washkewicz Tel: (216) 896-3000 Fax: (216) 896-4000 Tratech Inc. Trade Debt $1,565,379 31900 Sherman Avenue Madison Heights, MI 48071-5605 Attn: Carl Pittner Tel: (248) 776-5700 Fax: (248) 776-5702 Bronson Precision Products Div. Trade Debt $1,547,565 4800 S Lapeer Road Lake Orion, MI 48359-1877 Attn: Daniel Carroll Tel: (248) 340-9200 Fax: (248) 340-9277 Sanluis Rassini Trade Debt $1,506,646 International Inc. 14500 North Beck Road Plymouth, MI 48170-3383 Attn: Robert Anderson Tel: (734) 454-4904 Fax: (734) 454-4914 Nationwide Precision Products Trade Debt $1,479,121 200 Tech Park Drive Rochester, NY 14623-2487 Attn: Darren Gillette Tel: (585) 272-7100 Fax: (585) 272-0171 Lexington Corp. Properties Trust Real Estate $1,382,280 One Penn Plaza, Suite 4015 New York, NY 10119-4015 Attn: Patrick Carroll Tel: (212) 692-7200 Fax: (212) 594-6600 Metokote Corporation Trade Debt $1,366,260 1340 Neubrecht Road Lima, OH 45801 Attn: Jim Knight Tel: (419) 996-7800 Fax: (419) 996-7801 Haldex Corporation Trade Debt $1,305,525 2222 15th Street Rockford, IL 61125-1166 Attn: Jay Longbottom Tel: (815) 398-4400 Fax: (815) 398-5977 Freudenberg Nok Trade Debt $1,295,928 47690 East Anchor Court Plymouth, MI 48170-2455 Attn: Mohsen Sohi Tel: (734) 451-0020 Fax: (734) 451-2547 Kaiser Aluminum & Chemical Sales Trade Debt $1,254,169 9700 South Harlem Avenue Bedford Park, IL 60455-2302 Attn: Michael Ahern Tel: (708) 424-2180 Fax: (708) 424-6933 Shiloh Corporation Trade Debt $1,239,763 8800 Steel Drive Valley City, OH 44280 Attn: Stephen Graham Tel: (330) 558-2642 Fax: (330) 558-2670 ----------------------------------------------------------------- [00006] LIST OF DEBTORS' PUBLICLY HELD SECURITIES ----------------------------------------------------------------- Issuance Issue Amount Maturity No. of Holders -------- ------------ -------- -------------- Common Stock n/a n/a 41,877 as of 2/27/06 6.5% notes $150 million 03/15/08 21 as of 2/21/06 6.5% notes $350 million 03/01/09 77 as of 2/21/06 10.125% notes $250 million 03/15/10 16 as of 2/21/06 9% notes $575 million 08/15/11 37 as of 2/21/06 9% notes EUR200-mil. 08/15/11 unknown 5.85% notes $450 million 01/15/15 57 as of 2/21/06 7% notes $200 million 03/15/28 36 as of 2/21/06 7% notes $400 million 03/01/29 54 as of 2/21/06 As of February 22, 2006, about 152,088,404 shares of Dana Corporation's common stock were outstanding. Dana knows of 10 entities that own, control or hold, directly or indirectly, with power to vote, 5% or more of the voting securities of Dana Corporation: Percentage Ownership Names --------- ----- 7.20% Brandes Investment Partners, L.P. Brandes Investment Partners, Inc. Brandes Worldwide Holdings, L.P. Charles H. Brandes Glenn R. Carlson Jeffrey A. Busby 9.99% Donald Smith & Co., Inc. 11.80% Capital Research and Management Company 13.65% Lord, Abbett & Co. LLC 6.17% Gabelli Asset Management, Inc. ----------------------------------------------------------------- [00007] DEBTORS' MOTION FOR JOINT ADMINISTRATION OF CASES ----------------------------------------------------------------- Rule 1015(b) of the Federal Rules of Bankruptcy Procedure provides, in relevant part, that "[i]f two or more petitions are pending in the same court by or against a debtor and an affiliate, the court may order joint administration of the estates." The Debtors filed 41 voluntary petitions under Chapter 11 of the Bankruptcy Code. According to Michael J. Burns, chairman of the board, president, chief executive officer and chief operating officer of Dana Corporation, joint administration will eliminate the need for duplicative notices, applications and orders, thereby allowing the Debtors to avoid the time and expense that otherwise would be required to separately administer 41 individual cases. Mr. Burns notes that all creditors will benefit from the reduced costs that will result from joint administration. The Court will also be relieved of the burden of entering duplicative orders and maintaining redundant files in dozens of cases. Supervision of the administrative aspects of the Chapter 11 cases by the Office of the United States Trustee for Region 2 will also be simplified. At the Debtors' request, Judge Lifland rules that the Debtors' cases will be jointly administered for procedural purposes under In re Dana Corporation, Case No. 06-10354. The jointly administered Chapter 11 cases will be captioned: UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------X : In re : Chapter 11 : Dana Corporation, et al., : Case No. 06-10354 (BRL) : Debtors. : (Jointly Administered) : -------------------------------X The Debtors clarify that they are not seeking substantive consolidation of their estates. If the Debtors conclude that a substantive consolidation of one or more of their estates is appropriate, the Debtors will bring pleadings to that effect to the Court at a later date. Judge Lifland authorizes the Debtors to file monthly operating reports required by the Operating Guidelines and Financial Reporting Requirements promulgated by the U.S. Trustee on a consolidated basis if the Debtors determine, after consultation with the U.S. Trustee, that consolidated reports would further administrative economy and efficiency, without prejudice to any party-in-interest, and that the reports would accurately reflect the Debtors' consolidated business operations and financial affairs. ----------------------------------------------------------------- [00008] DEBTORS' MOTION TO PAY CRITICAL VENDORS CLAIMS ----------------------------------------------------------------- The Debtors have approximately 70 domestic manufacturing facilities that manufacture highly specified metal components, parts and systems for OEM Customers and others. Nearly all of these facilities maintain an integrated manufacturing system designed to ensure that the Debtors receive goods on a "just in time" basis. Although coordinated just-in-time supply systems produce cost savings for the Debtors and their OEM Customers in a number of ways, they also place an emphasis on maintaining a continuous and timely supply chain. "An interruption in the supply chain will quickly ripple through the system and result in interruptions in the OEM customers' manufacturing process, causing interruptions in the production of vehicles and other items by the Debtors' OEM customers. Such a shutdown could be catastrophic in light of, among other things, the potential assertion of consequential damages by the OEM customer against the Debtors for failure to honor existing supply agreements or other contractual obligations," Michael J. Burns, chairman of the board, president, chief executive officer, and chief operating officer of Dana Corporation, says. The Debtors estimate that alleged consequential damages for shutting down a major OEM assembly line in North America could easily exceed $250,000 per hour and may be as much as $500,000 for each hour of stoppage. The Debtors seek to avoid interruptions to their supply chain by identifying those vendors that would have the ability -- as well as the willingness -- to interrupt the supply chain. These Essential Suppliers fall into two main categories: -- materials suppliers, and -- maintenance suppliers. The Materials Suppliers supply, among other things: (a) components and parts that are directly assembled into the products sold by the Debtors; (b) other production materials, including welding wire and first-fill oil that are integrated in the Debtors' products during or at the close of the manufacturing process; and (c) lubricants, gases and other materials consumed in the production process, but not directly integrated into the manufactured products. Maintenance Vendors provide parts, materials and services to the Debtors' equipment and machinery utilized in the manufacturing operations. Mr. Burns tells the Court that the goods and services purchased from these vendors can't be obtained from other vendors. The Debtors do not have any viable alternatives to obtain substitute goods or services from other suppliers. However, these Essential Suppliers can sell their goods and services to other existing or new customers perceived to offer less financial risk. According to Mr. Burns, some of the Essential Suppliers have unstable financial situations that have been exacerbated in recent years due to the financial difficulties experienced by large companies in the automotive and vehicle supply industries. Other Essential Suppliers are small operations that are highly dependent on the Debtors' business for their continued viability. Thus, Mr. Burns says, the nonpayment of the Essential Supplier Claims could result in some of the Essential Suppliers suffering work stoppages or other business disruptions, and might ultimately result in those vendors ceasing operations altogether or filing their own bankruptcy cases. The Debtors intend to pay only a fraction of these vendors and to require postpetition commitments from these vendors as a quid pro quo for, and as a condition to, the payment of the Essential Supplier Claims. At the Debtors' request, the Court authorizes the Debtors to pay Essential Supplier Claims up to $52,100,000. Each recipient of an Essential Supplier Payment will be required, to the extent applicable, to: (a) continue to extend normalized trade credit and provide other business terms on a postpetition basis (consistent with past practices), including with respect to any applicable credit limits, the pricing of goods and services and the provision of equivalent levels of service, on terms at least as favorable as those extended prepetition or on other terms that are acceptable to the Debtors in their business judgment, until the Debtors emerge from chapter 11; and (b) release to the Debtors, as requested, goods or other assets of the Debtors in the Essential Supplier's possession. If an Essential Supplier accepts a Essential Supplier Payment and fails to provide the Debtors with the requisite Trade Terms, then: (a) any Essential Supplier Payment received by the Essential Supplier will be deemed an unauthorized postpetition transfer under Section 549 of the Bankruptcy Code that the Debtors may either: (i) recover from the Essential Supplier in cash or goods, or (ii) at the Debtors' option, apply against any outstanding administrative claim held by such Essential Supplier; and (b) upon recovery of any Essential Supplier Payment, the corresponding prepetition claim of the Essential Supplier will be reinstated in the amount recovered by the Debtors, less the Debtors' reasonable costs to recover those amounts. The Court permits the Debtors, in the exercise of their business judgment, to pay claims of any creditors or claimants entitled to administrative priority pursuant to Section 503(b)(9) of the Bankruptcy Code in the ordinary course of the Debtors' businesses and on terms and conditions the Debtors deem appropriate. Payment of any Twenty-Day Administrative Claims will not count against the Essential Supplier Cap. If a Repudiating Vendor refuses to perform its postpetition obligations pursuant to an executory contract with one or more of the Debtors in violation of the Bankruptcy Code because the Debtors have failed to pay the vendor's prepetition claim, Judge Lifland allows the Debtors to pay that claim provisionally, provided that, within ten business days of payment, the Debtors file a Notice of Repudiating Vendor and seek the entry of an Order to Show Cause. If a Repudiating Vendor refuses to perform its postpetition obligations pursuant to an executory contract with one or more of the Debtors in violation of the Bankruptcy Code, the Debtors may: (a) file a Notice of Repudiating Vendor, setting forth the Debtors' belief that the vendor is in violation of the Bankruptcy Code through its failure to perform under a prepetition agreement, identifying the name of the vendor, the identity of the agreement in question and, if any Provisional Payments were made, the amounts and date of such Provisional Payments; and (b) seek the entry of an Order to Show Cause, which will require the Repudiating Vendor to appear at the next regularly scheduled omnibus hearing in the Debtors' chapter 11 cases that is at least five business days after the date that the Notice of Repudiating Vendor is filed, to show why it should not be found to have willfully violated Sections 362 and 365 of the Bankruptcy Code and required to return any Provisional Payment made by the Debtors. The Debtors have not disclosed and don't intend to publicly disclose the identity of any Essential Supplier. ----------------------------------------------------------------- [00009] DEBTORS' MOTION TO APPROVE $1.45 BIL. DIP FINANCING PACT ----------------------------------------------------------------- "The Debtors require access to their cash and the proceeds of existing accounts receivable and inventory to operate their businesses and preserve their value as going concerns," Michael J. Burns, Dana Corporation's chairman of the board, president, chief executive officer and chief operating officer, told Judge Lifland at an Emergency First Day Hearing Friday afternoon in Manhattan. Dana pledged virtually all of its current assets to secure repayment of $377,000,000 owed to the lending syndicate led by Citicorp USA under a Security Agreement dated Nov. 18, 2005. Another $210,000,000 is outstanding under a Receivables Sale Agreement dated April 15, 2005. "Without immediate access to cash collateral and new borrowing," Mr. Burns stressed, the Debtors' business operations will "grind to an almost immediate halt, which would seriously jeopardize, and may destroy, the going-concern value of the Debtors' businesses." Dana Corporation and its debtor-affiliates want immediate access to new credit under a new debtor-in-possession financing facility that will enable the Debtors to repurchase the receivables subject to their U.S. Receivables Program and use collections on these receivables to finance operations during their chapter 11 cases until the Debtors can start to collect on their postpetition receivables. In addition, the Debtors say, the substantial new liquidity under the DIP Credit Facility will ensure that the Company can pay bills as they come due during the chapter 11 restructuring process. Henry S. Miller at Miller Buckfire & Co., LLC, Dana's financial advisor and investment banker, relates that Dana executed confidentiality agreements in mid-February with CIT Group, Citigroup, Credit Suisse First Boston, Deutsche Bank Securities, Inc., GE Commercial Credit Corp. and Morgan Stanley. After receiving due diligence materials, Dana received DIP Financing Proposals from Citigroup, JPMorgan and Bank of America; Credit Suisse and CIT; Deutsche Bank and a to-be-named asset-based lender; and GECC and Morgan Stanley. Mr. Miller says the Citigroup, JPMorgan and BofA package offered "significantly better aggregate terms than any of the other Potential Lenders." The Debtors have negotiated the terms of a new $1,450,000,000 postpetition senior secured financing facility. The Debtors want interim authority to immediately borrow up to $800,000,000 under the revolving and swing line facility portions of the DIP Credit Facility. The proceeds from this proposed interim borrowing will be used to: (a) refinance $210,000,000 to $225,000,000 of obligations under the U.S. Receivables Program; (b) satisfy $9,000,000 to $10,000,000 of outstanding obligations under a 1994 Citibank Business Card Purchasing Card Program; (c) pay costs and fees in connection with the DIP Credit Facility; and (d) provide general financing for working capital, letters of credit, capital expenditures and other general purposes. Dana explains that the repurchase of the U.S. Receivables will provide an immediate increase in liquidity. Currently, the Receivable Facility advances 30% of accounts receivables to the company. The DIP Lenders will allow Dana to borrow 68% of the book value of receivables. The Debtors argue that they should be authorized to pay off the Existing Corporate Credit Card Obligations because the Corporate Credit Card Program would be costly and time-consuming to replace and the Company relied on the program daily to obtain necessary goods and services and to pay for necessary expenses throughout their business organizations. Importantly, Citibank, the issuing bank under the Corporate Credit Card Program, has assured the Debtors that the commencement of their chapter 11 cases will not be cause for termination if the Bankruptcy Court authorizes the payoff. The DIP Credit Facility will be secured by first or second priority security interests in substantially all of the Debtors' existing and after acquired assets, including priming liens on the collateral of the Prepetition Lenders, but excluded from the DIP Collateral will be the Debtors' avoidance actions under chapter 5 of the Bankruptcy Code, the stock of certain holding companies for the stock interests in the foreign Dana Companies and withholdings related to trust fund taxes and similar obligations. The DIP Lenders under the DIP Credit Facility also will be awarded a super-priority administrative expense claim on account of all funds borrowed under the DIP Credit Facility. In connection with the approval of the DIP Credit Facility, the Debtors ask the Court to approve an adequate assurance package allowing continued use of the Prepetition Lenders' cash collateral pending entry of the final order approving the DIP Credit Facility, at which time the Prepetition Lenders' indebtedness under the Revolving Credit Facility and obligations secured by the Security Agreement, other than the P-Card Program, will be paid in full with the proceeds of the term loan portion of the DIP Facility. As adequate assurance for the use of their cash collateral, the Prepetition Lenders will receive replacement liens in all of the DIP Collateral, subject only to the security interests granted to the DIP Lenders and the Carve-Out, to secure them against any diminution in the value of their collateral under the Security Agreement. The Prepetition Lenders will also receive a super-priority administrative expense claim under Section 507(b) of the Bankruptcy Code to the extent that the Adequate Protection Liens prove inadequate to protect the Prepetition Lenders against any diminution in the value of their collateral after the Petition Date. Interim access to the DIP Credit Facility will help provide assurances to the Debtors' suppliers, vendors and employees that they will be paid for postpetition services, Corinne Ball, Esq., at Jones Day, told Judge Lifland Friday afternoon. These assurances will be essential to the Debtors' efforts to persuade their vendors to continue shipping goods and providing services to the Debtors on customary trade credit. The liquidity provided by the DIP Credit Facility will provide assurances to the Debtors' customers that they will be able to deliver products during their chapter 11 cases. "Approval of interim borrowing under the DIP Credit Facility," Ms. Ball said, "is crucial to maximizing the value of the Debtors' estates." "The Debtors' decision to enter into the DIP Credit Facility represents an exercise of sound business judgment," Ms. Ball argued. "Without immediate access to postpetition financing, the Debtors could suffer substantial and irreparable harm, which could threaten their ability to reorganize successfully. By contrast, once the DIP Facility is approved, the Debtors' ability to minimize disruption to their business operations and instill confidence in their various stakeholders will be substantially enhanced. The Debtors' need for access to the DIP Facility, therefore, is urgent. In addition, because the Debtors lack sufficient unencumbered funds to meet certain imminent expenses necessary for a smooth transition to chapter 11, it is essential that they obtain interim financing under the DIP Facility before the Court conducts the Final Hearing." The salient terms of the DIP Financing Facility are: Borrowers: Dana Corporation, as debtor-in-possession Guarantors: All Debtor-affiliates Administrative Agent: Citicorp North America, Inc. Initial Issuing Banks: Citibank North America, Inc. Bank of America, N.A. JPMorgan Chase Bank, N.A. Initial Swing- Line Lender: Citicorp North America, Inc. Initial Lenders: Citicorp North America, Inc. JPMorgan Chase Bank, N.A. Credit Facilities: The DIP Facility consists of: a) a non-amortizing revolving credit and letter of credit facility and a swing line facility in a combined amount of up to $800,000,000 until entry of the Final Order and thereafter the lesser of: (A) the Borrowing Base or (B) $750,000,000 minus any reductions in the Revolving Credit Commitments on account of mandatory prepayments made under the terms of the DIP Loan Agreement and b) a non-amortizing senior secured Term Facility providing for up to $700,000,000 of senior secured term loans to be made available on the date of the Final Order. Maturity Date: The DIP Facility terminates on the earlier of September __, 2007, and the effective date of a reorganization plan for the Debtors. Interest Rates: The Debtors will pay interest equal to: -- the greater of Citibank's Base Rate and 50 basis points over the Federal Funds Rate; plus -- 225 additional basis points for Term Loans; and -- 125 additional basis points for Revolving Loans; and -- 100 additional basis points for any Eurodollar Loan; and -- 200 additional basis points in the event of a default under the DIP Facility. Fees: The Debtors agree to pay: -- an Unused Revolving Commitment Fees equal to 0.375% per annum on every dollar not borrowed under the Revolving Facility; -- an Unused Term Commitment Fee equal to 0.50% per annum on every dollar not borrowed under the Term Loan Facility; -- customary Letter of Credit Fees; -- additional fees set forth in a [non-public] Fee Letter; and -- all of the DIP Lenders' reasonable documentation costs and expenses, including external counsel and collateral valuation fees. DIP Liens: Subject only to the Carve-Out, all amounts owed to the DIP Lenders are secured, pursuant to Section 364 of the Bankruptcy Code, by valid, binding, continuing, enforceable, fully-perfected first priority senior security interests in and liens on all property of the Debtors that is not otherwise encumbered by a valid, perfected non- avoidable and enforceable lien in existence as of the Petition Date or encumbered by a valid liens in existence as of the Petition Date that is perfected subsequent to such date to the extent permitted by Section 546(b) of the Bankruptcy Code. The DIP Lenders' collateral package includes all cash and cash collateral of the Debtors and any investment of that cash and cash collateral, inventory, accounts receivable, other rights to payment (whether arising before or after the Petition Date), contracts, properties, plants, equipment, general intangibles, documents, instruments, interests in leaseholds, real property, patents, copyrights, trademarks, trade names, other intellectual property, capital stock of subsidiaries and the proceeds of all the foregoing. The DIP Lenders' collateral package excludes (i) the Debtors' claims and causes of action under Sections 502(d), 544, 545, 547, 548, 549, 550 or 551 of the Bankruptcy Code; (ii) withholding of trust fund taxes and insurance payments and ERISA funds; (iii) 34% of the equity interests in certain Foreign Subsidiaries; (iv) trademarks consisting of United States intent-to- use trademark applications to the extent that, and solely during the period in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark applications under applicable federal law. Carve-Out: The DIP Lenders agree to a $20,000,000 Carve-Out from their liens to permit payment of fees owed to the Clerk of the Bankruptcy Court, the Office of the United States Trustee, any fees and expenses incurred by a trustee under section 726(b) of the Bankruptcy Code, fees and expenses owed to professionals employed and retained by the Debtors and any Creditors' Committee. Minimum Availability Covenant: Dana promises the DIP Lenders that Availability under the DIP Facility will not fall below $100,000,000 at any time. Earnings Covenant: Dana promises the DIP Lenders that it will report Consolidated Earnings Before Interest, Taxes, Depreciation, Amortization and Restructuring Costs of no less than: Minimum Testing Period EBITDAR -------------- ------- 3 months ending May 31, 2006 $20,000,000 4 months ending June 30, 2006 $40,000,000 5 months ending July 31, 2006 $45,000,000 6 months ending Aug. 31, 2006 $70,000,000 7 months ending Sept. 30, 2006 $100,000,000 8 months ending Oct. 31, 2006 $145,000,000 9 months ending Nov. 30, 2006 $190,000,000 10 months ending Dec. 31, 2006 $215,000,000 11 months ending Jan. 31, 2007 $240,000,000 12 months ending Feb. 28, 2007 $260,000,000 12 months ending Mar. 31, 2007 $270,000,000 12 months ending Apr. 30, 2007 $280,000,000 12 months ending May 31, 2007 $280,000,000 12 months ending June 30, 2007 $280,000,000 12 months ending July 31, 2007 $280,000,000 12 months ending Aug. 31, 2007 $280,000,000 Investment Covenant: Dana and its Subsidiaries are permitted under the DIP Facility to: -- make acquisitions not to exceed $10,000,000 during any Fiscal Year; -- make investments in Spicer S.A, or its subsidiaries in an aggregate amount not to exceed $45,000,000 plus the value of certain of the Debtors' equipment to be transferred to Spicer; -- make investments in connection with tooling programs of Dana suppliers not to exceed $135,000,000; -- permit investments in foreign subsidiaries in an amount not to exceed $50,000,000; and -- permit issuance of letters of credit for the benefit of foreign subsidiaries in an aggregate face amount not in excess of $200,000,000. The DIP Lenders are represented by: Douglas P. Bartner, Esq. Marc B. Hankin, Esq. Shearman & Sterling LLP 599 Lexington Avenue New York, NY 10022 The Pre-Petition Lenders are represented by: Maura E. O'Sullivan, Esq. Shearman & Sterling LLP 599 Lexington Avenue New York, NY 10022 A full-text copy of the DIP Financing Agreement is available at no charge at http://bankrupt.com/misc/Dana_DIP_Facility.pdf At an Emergency First Day Hearing Friday afternoon in Manhattan, Judge Lifland granted Dana's request to access up to $800,000,000 under the DIP Facility on an interim basis pending a Final DIP Financing Hearing. Through the conclusion of that Final DIP Financing Hearing, Judge Lifland approves the Debtors' request to grant adequate protection liens to the prepetition lenders to permitting them to dip into those lenders' cash collateral. Judge Lifland ruled that an Official Committee of Unsecured Creditors organized and appointed by the U.S. Trustee will have until May 17, 2006, to investigate and assert any claims against the Prepetition Lenders. The Committee won't be allowed to spend more than $250,000 on that investigation, Judge Lifland ruled. The Final DIP Financing Hearing is scheduled for March 29, 2005 at __:__ _.m. Objections, if any, must be filed and served by 4:00 p.m. on March 24, 2006. ----------------------------------------------------------------- [00010] COURT APPROVES DANA CORPORATION'S FIRST DAY MOTIONS ----------------------------------------------------------------- Approval of 'First-Day Orders' Enables Company to Maintain Normal Operations and Continue Employee Pay and Benefits TOLEDO, Ohio -- March 3, 2006 -- Dana Corporation (NYSE: DCN) today reported that it has received interim Court approval to access a new $1.45 billion debtor-in-possession (DIP) financing facility from Citigroup, Bank of America N.A., and JP Morgan Chase Bank, N.A. The court authorized Dana to utilize up to $800 million of the facility on an interim basis pending a final order approving the full facility. This credit facility will be used for the company's normal working capital requirements, including employee wages, healthcare benefits, supplier payments, and other operating expenses during the reorganization process. The Company intends to make timely payment for goods received and services provided to it on or after the filing date in the normal course of business and in accordance with terms of existing supplier agreements. In addition, Judge Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York today also granted approval for a number of other "First-Day Motions" that Dana made as part of its filings for reorganization under Chapter 11 of the U.S. Bankruptcy Code to support its employees and suppliers, together with its customers and other stakeholders. The orders granted by the Court will ensure that the company's business continues to function without disruption. Dana has received authorization to, among other things: * Continue to provide its employee wages, healthcare coverage and similar benefits for its employees uninterrupted; * Pay suppliers for goods and services provided; and * Maintain uninterrupted delivery of products and services to its customers. Dana Chairman and Chief Executive Officer Michael Burns said, "We made good progress on our first day in Court and are pleased to have received the approvals needed to maintain normal operations throughout our organization. As we transition into our Chapter 11 reorganization, we will do so smoothly and with continued focus on meeting the needs of our customers by providing them with the quality products they have come to expect from us, delivered on time and to best-in-class specification." Dana filed to reorganize under Chapter 11 earlier today in the U.S. Bankruptcy Court for the Southern District of New York. The case number is 06-10354. More information about Dana's Chapter 11 filing, including Interim Orders and other First-Day Motions, is available online at http://www.dana.com/reorganization About Dana Corporation Dana people design and manufacture products for every major vehicle producer in the world. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. A leading supplier of drivetrain, chassis, structural, and engine technologies, Dana employs 46,000 people in 28 countries. Based in Toledo, Ohio, the company reported sales of $9 billion in 2004. Dana's Internet address is: http://www.dana.com/ ----------------------------------------------------------------- [00011] U.S. TRUSTEE SETS ORGANIZATIONAL MEETING FOR MARCH 10 ----------------------------------------------------------------- Deirdre A. Martini, the United States Trustee for Region 2, will convene an organizational meeting in Dana Corp.'s chapter 11 cases at 10:00 a.m. on Friday, March 10, 2006. The meeting will be held in the Manhattan Ballroom at the Grand Hyatt New York hotel, located on Park Avenue at Grand Central Terminal. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' bankruptcy cases. This is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. However, a Debtor's representative will attend and provide background information regarding the cases. ----------------------------------------------------------------- [00012] FITCH LOWERS DANA CORP.'S ISSUER DEFAULT RATING TO C ----------------------------------------------------------------- CHICAGO, Illinois -- March 3, 2006 -- Fitch Ratings has downgraded the ratings of Dana Corporation as follows: -- Issuer default rating (IDR) to 'C' from 'CCC'; -- Senior secured bank facility to 'B-' from 'B'; -- Senior unsecured debt to 'CC' from 'CCC'. The recovery rating on the senior unsecured debt is 'RR4', and the senior secured bank facility has a recovery rating of 'RR1'. Dana remains on Rating Watch Negative by Fitch. The rating downgrade reflects Dana's failure to pay $21 million in interest scheduled for payment on March 1. Fitch's concerns also include: the protracted period of time in obtaining secured bank financing; a higher risk that liquidity needs could increase if suppliers begin to insist on cash terms; the potential for more aggressive restructuring actions which could increase demands on cash; Dana's reliance on the declining sport utility vehicle (SUV) market; and the company's financial condition heading into a potential commercial vehicle downturn in 2007. While the Rating Watch Negative status includes a going concern issue, as reflected by the 'C' IDR, it also includes Fitch's concerns regarding the outcome of an ongoing SEC accounting investigation and uncertainty with respect to the final amount of a secured bank line, which could impair the position of unsecured bondholders. Fitch estimates that as of Sept. 30, 2005, certain of Dana's bond indentures restrict the company's ability to incur debt secured by real property or the value of domestic subsidiary stock to about $400 million (15% of net tangible assets, as defined) before pari passu provisions within these indentures would otherwise be triggered. Debt secured by most other assets is not specifically restricted under Dana's indentures. For this reason, Fitch believes that Dana has adequate tangible assets available to also support a total of approximately $1 billion in bank and asset securitization facilities. Per Dana's press release dated Nov. 21, 2005, the company has already pledged to the banks certain domestic current assets and machinery and equipment. In the event that Dana's existing accounts receivable agreement must be terminated, Fitch presumes that the lenders to the credit agreement would benefit from first liens on the underlying receivables collateral. Fitch calculates that as of the end of the third quarter, Dana had negative free cash flow for the previous 12 months of $712 million versus full year 2004 negative free cash flow of $329 million. At Sept. 30, 2005, Dana had $145 million available under its bank facility, $55 million available under a $275 million accounts receivable securitization program and $730 million in cash and cash equivalents. Given the rate of increase in negative free cash flow and the amounts drawn at the end of the third quarter, there is a high probability that Dana's current bank lines could now be fully drawn. ----------------------------------------------------------------- [00013] MISSED INTEREST PAYMENTS CUE MOODY'S TO JUNK DANA RATINGS ----------------------------------------------------------------- NEW YORK, New York -- March 2, 2006 -- Moody's Investors Service lowered these ratings: Dana Corporation: -- Corporate Family to Caa3 from B3; -- senior unsecured to Ca from Caa1; Dana Credit Corporation: -- senior unsecured to Ca from Caa1. The downgrades reflect the company's announcement that it failed to make the March 1, 2006 interest payments on its 7% Senior Notes due March 1, 2029 and its 6-1/2% Senior Notes due March 1, 2009. The announcement dramatically heightens the potential for Dana's filing for Chapter 11, and casts greater doubt on the progress of the company's discussions to renegotiate its bank facilities. The Negative outlook reflects the continuing uncertainty of Dana's ability to renegotiate its bank facilities, avoid a Chapter 11 filing, and stem the erosion in its operating performance despite the possibility of lower production levels and continued price-downs by its domestic OEM customers. Dana's liquidity rating remains at the SGL-4 level, reflecting the weakness in the company's ability to generate cash from operations and its need to renegotiate its credit facilities. Dana Corporation, headquartered in Toledo, Ohio, is a global leader in the engineering, manufacture and distribution of products and services for the automotive, engine, heavy truck, off-highway, industrial and leasing markets. Dana Credit Corporation is a wholly owned leasing and finance subsidiary of Dana Corporation, which is in the process of being liquidated. Dana had annual sales of approximately $9.1 billion in 2004 and employs 46,000 people in 28 countries. ----------------------------------------------------------------- [00014] S&P CUTS DANA CORP.'S RATING TO D POST-BANKRUPTCY ----------------------------------------------------------------- NEW YORK, New York -- March 3, 2006 -- Standard & Poor's Ratings Services lowered its corporate credit ratings on Dana Corp. and its wholly owned subsidiary, Dana Credit Corp., to 'D' from 'CCC-'. The ratings have been removed from CreditWatch with developing implications, where they were placed on Feb. 24, 2006. Total outstanding consolidated debt at Sept. 30, 2005 (last reporting date), was about $2.6 billion. "This action follows the announcement that Dana and 40 of its U.S. subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code," said Standard & Poor's credit analyst Daniel DiSenso. Toledo, Ohio-based Dana's non-U.S. operations are not included in the filing. To fund its operations while in bankruptcy, Dana has secured a $1.45 billion debtor-in-possession (DIP) financing facility. Dana has been experiencing increased financial stress since mid-2005 due to declining production levels from its largest domestic customers, especially Ford Motor Co.; sharp increases in commodity prices that it has not been able to pass along to customers; and its own operational inefficiencies at both light and commercial vehicle operations that the company disclosed in the fall of 2005 along with its restructuring plan to improve operating performance. In addition, Dana has been unable to obtain a new and expanded credit facility in a timely manner to ensure adequate liquidity. Consequently, Dana's suppliers demanded upfront payments, helping to precipitate a liquidity crisis and resulting in the Chapter 11 filing. Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at http://www.ratingsdirect.com/ All ratings affected by this rating action can be found on Standard & Poor's public Web site at http://www.standardandpoors.com/ under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. ----------------------------------------------------------------- [00015] DBRS CUTS DANA CORP.'S LOAN & BOND RATINGS TO D ----------------------------------------------------------------- TORONTO, Canada -- March 3, 2006 -- Dominion Bond Rating Service has today downgraded the Bank Debt rating of Dana Corporation to D from CCC, and the Senior Unsecured Notes rating to D from CC. DBRS's rating action follows the Company's decision to file for Chapter 11 bankruptcy protection. The filing covers Dana and 40 U.S. subsidiaries of the Company, and excludes Dana's European, South American, Asia-Pacific, Canadian, and Mexican subsidiaries. DBRS' ratings are based on public information. For more information on this credit or on the auto and auto parts industry, visit http://www.dbrs.com/ * * * A day before Dana's chapter 11 filing, Dominion Bond Rating Service downgraded the Bank Debt rating to CCC from BB (low) and the Senior Unsecured Notes rating to CC from B (high). Dominion said the ratings would remain "Under Review with Negative Implications" where they were placed on Oct. 11, 2005. Thursday's rating actions followed the Company's failure to make the interest payment due to March 1, 2006. DBRS noted that Dana's failure to make the interest payment by March 31 would result in an eventual default. DBRS notes that Dana has suffered a precipitous decline in profitability impacted by these factors: (1) A decline in demand from the Company's major customers, Ford Motor Company and General Motors Corporation, which account for approximately 36% of Dana's revenue; (2) Persistent high raw material costs; and (3) Operating problems at the Company's commercial vehicle unit. DBRS has maintained the Company "Under Review with Negative Implications" reflecting the uncertainty of the Company's ability to make the payment within the grace period. DBRS Confirms CDO Ratings TORONTO, Canada -- March 3, 2006 -- Dominion Bond Rating Service notes that in light of the decision made today by Dana Corporation to file for Chapter 11 bankruptcy protection, various credit event declarations will inevitably ensue under existing credit default swaps and collateralized debt obligation (CDO) transactions. With the inclusion of Dana as a reference entity in approximately 8% of CDO structures rated by DBRS (where it is one of a large pool of names), the impact of a default by Dana is hereby evaluated and considered. Based on analysis and review of scenarios that include a default by Dana, DBRS has determined that no downgrades of any CDO structures would result. DBRS cites the following reasons for this conclusion: (1) DBRS employs a conservative modeling and structuring approach at the outset of the rating process. This creates structures that are more resilient to adverse performance of underlying credits. (2) CDO tranches rated by DBRS are typically senior tranches of the capital structure. These tranches are less impacted by the performance of individual credits since such credit losses are buffered by significant levels of subordination. (3) In the relatively benign credit environment of the past two years, sizeable credit cushion has generally accumulated in many CDO structures due to the benefit of time decay. This benefit further strengthens the performance of such structures over their remaining lives. DBRS will continue to monitor this situation closely as the impact of final recovery values for Dana is substantiated. For more information on this credit or on this industry, visit http://www.dbrs.com/ or contact us at: info@dbrs.com. ----------------------------------------------------------------- [00016] NYSE SUSPENDS TRADING & MOVES TO DELIST DANA CORP. ----------------------------------------------------------------- NEW YORK, New York -- March 3, 2006 -- The New York Stock Exchange announced today that it determined that the common stock of Dana Corporation -- ticker symbol DCN -- should be suspended immediately. The Exchange's action is being taken in view of the Company's March 3, 2006, announcement of that it and 40 of its U.S. subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. In addition, the Exchange noted the last trading price of the Company's common stock of $0.69 on March 3, 2006. The NYSE noted that it may, at any time, suspend a security if it believes continued dealings in the security on the NYSE are not advisable. The Company has a right to a review of this determination by a Committee of the Board of Directors of the Exchange. Application to the Securities and Exchange Commission to delist the issue is pending the completion of applicable procedures, including any appeal by the Company of the NYSE staff's decision. *** End of Issue No. 1 ***