================================================================= HAYES LEMMERZ BANKRUPTCY NEWS Issue Number 1 ----------------------------------------------------------------- Copyright 2001 (ISSN XXXX-XXXX) December 6, 2001 ----------------------------------------------------------------- Bankruptcy Creditors' Service, Inc. 609-392-0900 FAX 609-392-0040 ----------------------------------------------------------------- HAYES LEMMERZ BANKRUPTCY NEWS is published by Bankruptcy Creditors' Service, Inc., 24 Perdicaris Place, Trenton, New Jersey 08618, on an ad hoc basis (generally every 10 to 20 days) as significant activity occurs in the Debtor's case. Each issue is prepared by Peter A. Chapman, Editor. Subscription rate is US$45 per issue. Re-mailing of this newsletter is prohibited. ================================================================= IN THIS ISSUE ------------- [00000] HOW TO SUBSCRIBE TO HAYES LEMMERZ BANKRUPTCY NEWS [00001] BACKGROUND & DESCRIPTION OF HAYES LEMMERZ INTERNATIONAL [00002] COMPANY'S APRIL 30, 2001 CONSOLIDATED BALANCE SHEET [00003] HAYES LEMMERZ DEBTORS' CHAPTER 11 DATABASE [00004] HAYES LEMMERZ DEBTORS' 50-LARGEST UNSECURED CREDITORS [00005] COMPANY'S PRESS RELEASE ANNOUNCING THE CHAPTER 11 FILING [00006] DEBTORS' MOTION TO PAY PREPETITION CRITICAL VENDOR CLAIMS KEY DATE CALENDAR ----------------- 12/05/01 Voluntary Petition Date 12/26/01 Deadline to provide Utilities with adequate assurance 01/04/02 Deadline for filing Schedules of Assets and Liabilities 01/04/02 Deadline for filing Statement of Financial Affairs 01/04/02 Deadline for filing Lists of Leases and Contracts 02/02/02 Deadline to make decisions about lease dispositions 03/05/02 Deadline to remove actions pursuant to F.R.B.P. 9027 04/04/02 Expiration of Debtor's Exclusive Plan Proposal Period 06/03/02 Expiration of Debtor's Exclusive Solicitation Period 12/04/03 Deadline for Debtor's Commencement of Avoidance Actions Organizational Meeting with UST to form Committees Bar Date for filing Proofs of Claim First Meeting of Creditors pursuant to 11 USC Sec. 341 ----------------------------------------------------------------- [00000] HOW TO SUBSCRIBE TO HAYES LEMMERZ BANKRUPTCY NEWS ----------------------------------------------------------------- HAYES LEMMERZ BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. 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Name: ---------------------------------------------- Firm: ---------------------------------------------- Address: ---------------------------------------------- ---------------------------------------------- Phone: ---------------------------------------------- Fax: ---------------------------------------------- E-Mail: ---------------------------------------------- HAYES LEMMERZ 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 Debtor's case. 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 HAYES LEMMERZ 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 HAYES LEMMERZ INTERNATIONAL ----------------------------------------------------------------- HAYES LEMMERZ INTERNATIONAL, INC. 15300 Centennial Dr. Northville, Michigan 48167 Telephhone (734) 737-5000 Fax (734) 737-2003 http://www.hayes-lemmerz.com Hayes Lemmerz International, Inc., is a leading supplier of wheels and other suspension components to the global automotive and commercial highway markets with a presence in 17 countries. The Company's operations are conducted through its world headquarters located in Northville, Michigan, and approximately 25 facilities in North America, 20 manufacturing facilities in Europe and five manufacturing facilities in South America, Asia and South Africa. As of November 12, 2001, the Company employed approximately 14,000 full-time employees worldwide. The Product & The Customer The Company's operations are conducted through six business units: (A) North American Wheels (B) European Fabricated Wheels (C) European Cast Wheels The North American and European wheels divisions design, manufacture and distribute cast aluminum and fabricated wheels. Hayes is the world's largest manufacturer of automotive wheels with an estimated 20% global market share. (D) Suspension Components The Suspension division designs, manufactures and distributes wheel-end attachments and aluminum structural components and primarily operates in North America. Hayes is the largest independent manufacturer of wheel-end attachments and aluminum structural components in North America. (E) Automotive Brakes and Powertrain Components The Brakes and Powertrain division designs, manufactures and Distributes automotive brake, powertrain and engine components. Brake components include composite metal drums and full cast drums for drum-type brakes and cast iron rotors for disc brakes, and powertrain components include aluminum and polymer intake manifolds, aluminum cylinder heads, water pumps, brackets and ductile iron exhaust manifolds. (F) Commercial Highway and Aftermarket The Commercial Highway and Aftermarket division designs and manufactures wheels and brake components for commercial highway vehicle manufacturers and also sells wheels and other automotive products in the aftermarket. The Company's principal customers are leading global original equipment manufacturers ("OEMs") of vehicles including General Motors, Ford, Daimler-Chrysler, BMW, Volkswagon, Nissan and Honda, among others. The Company also has over 300 commercial highway vehicle customers in North America, Europe and Asia, including Trailmobile, Dana/Mack, DaimlerChrysler, Great Dane, Freightliner, PACCAR, Volvo, General Motors and others. Events Leading to Chapter 11 Filing In February 1999, Hayes acquired CMI International, a leading full service supplier of wheel-end attachments, aluminum structural components and powertrain components to the automotive industry, for a cash purchase price of approximately $605 million. The acquisition of CMI was financed through borrowings under a senior secured bank loan facility and through a senior subordinated note issue. During the second half 2000 and throughout 2001, domestic auto parts manufacturers suffered from reduced North American light vehicle production and even sharper reductions in North American heavy-duty truck builds. Due in part to these factors, as well as operational difficulties at certain of its North American plants, Hayes began experiencing a downward trend in its financial performance which necessitated the amendment of various financial covenants with the Bank Lenders. In May 2001, the Company's accounts receivables securitization program was terminated, resulting in increased borrowings from the Bank Lenders. The inability to fund receivables off-balance sheet put additional pressure on the Company's liquidity situation. In September 2001, the Company announced that it would restate earnings for fiscal year 2000 and first quarter 2001 due to the discovery of accounting errors and that the restatement would result in sharply wider losses. As a result of this discovery, the Company was unable to access additional availability from the Bank Lenders. In addition, the Company's debt rating was downgraded by the major rating agencies, which effectively precluded Hayes from accessing the commercial paper market or other alternative financing sources to fund operations. Without access to additional sources of financing, the Hayes could not generate sufficient cash to satisfy its debt service obligations and fund operations. As a result of these challenges, the Company concluded that a chapter 11 filing was the best available means by which to address leverage and liquidity problems and implement an operational restructuring. The Restructuring Initiatives Kenneth A. Hiltz, Hayes Lemmerz's Chief Financial Officer and Chief Restructuring Officer, says that the Company has identified numerous opportunities available to the Company to improve its operational performance and to realize significant cost savings. Specifically, the operational improvement plan -- already underway -- includes: (1) enhancing the leadership team On August 1, 2001, Hayes hired Curtis J. Clawson as its new Chairman and Chief Executive Officer. Most recently, Mr. Clawson was President and Chief Operating Officer of American National Can Group, a $2.5 billion NYSE traded manufacturing company that was acquired by Rexam PLC. Prior to that, Mr. Clawson was a senior executive with Allied Signal, Inc., where he was President of Allied Signal's Filters (Fram) and Spark Plugs (Autolite) Group, a $500 million automotive components business, and then President of Allied Signal's Laminate Systems Group, a $500 million global supplier of laminate boards to the electronics industry. Mr. Clawson has an outstanding track record of increasing sales and profitability with global companies in automotive and non-automotive industries. He possesses considerable experience in lean manufacturing, sales, marketing and general management. Mr. Clawson brings a wealth of operating and managerial expertise to the Company's restructuring, positioning the Company to capitalize on its core competencies and effectively reorganize its businesses. Mr. Clawson quickly enhanced the management team by hiring a number of senior executives with the talent and experience to complement Mr. Clawson as the Company restructures its businesses. These include: Mr. James Stegemiller, President of the Company's North American Wheels Business Unit, formerly Global Vice President of Manufacturing at ArvinMeritor, a manufacturer of components for commercial and light vehicles and before that the General Manager of a business unit at General Motors; Mr. Fred Bentley, President of the Commercial Highway and Aftermarket Services Division, formerly a Managing Director of the European and South African operations of Honeywell's Holts(R), a car care products company; Mr. Gordon Pebbles, Director of Manufacturing N.A. Aluminum Wheels, formerly the Director of Operations of ArvinKayaba, the Brazilian division of the automobile parts supplier, ArvinMeritor; and Mr. Michael J. Edie, Vice President of Materials and Logistics, formerly a consultant specializing in supply chain management solutions and before that, Vice President of U.S. and Canada Distribution and Supply at the Eastman Kodak Company, where he also held prior management positions. Furthermore, in October 2001, the Company hired Kenneth A. Hiltz as Chief Financial Officer and Chief Restructuring Officer and Herbert S. Cohen as the Chief Accounting Officer. Both of these individuals are members of the well-known restructuring consulting firm of Jay Alix & Associates. Mr. Hiltz is helping the Company centralize the financial function, and Mr. Cohen is assisting in the financial restatement process. (2) restructuring the role of the corporate headquarters In November 2001, the Company announced that it was discontinuing operations at its Bowling Green, KY manufacturing plant, in addition to the previously announced shut down of its Petersburg, MI manufacturing plant. These closures will help the Company reduce fixed costs and increase capacity utilization at the remaining plants. (3) increasing oversight over the financial function (4) rationalizing SG&A On November 2, 2001, Hayes also initiated its SG&A rationalization process by terminating 135 salaried employees and offering an additional 45 employees early retirement, or approximately 11% of its North American salaried workforce. (5) implementing operational improvements at the plant level with a focus on lean manufacturing At the same time it implements the operational improvements outlined above, the Company intends to utilize the restructuring process to bring its debt leverage in line with its cash flow generating capability and industry norms. This should create financial flexibility for future operating requirements and capital expenditures and improve liquidity. The Company is also exploring the divestiture of several under performing or non-core businesses and product lines and the discontinuance of operations at several manufacturing facilities, all with the goal of focusing the Company on its core competencies, Mr. Hiltz says. Notwithstanding the circumstances that contributed to the Company's current liquidity and operational challenges, Mr. Hiltz stresses, the Company is an industry leader in the manufacturing and sale of automotive wheels and other suspension components. Mr. Hiltz says that the Company expects to emerge from chapter 11 having improved its operations and rationalized its capital structure. These restructuring efforts are designed to result in even greater profitability for the Company and to solidify its position as the market leader in many of its product categories. ----------------------------------------------------------------- [00002] COMPANY'S APRIL 30, 2001 CONSOLIDATED BALANCE SHEET ----------------------------------------------------------------- HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES Consolidated Balance Sheets At April 30, 2001 (Unaudited) Assets Current assets: Cash and cash equivalents $28,900,000 Receivables net of $7,600,000 allowance 266,300,000 Inventory 191,900,000 Deferred tax assets 42,400,000 Prepaid expenses and other 21,200,000 -------------- Total current assets 550,700,000 Net property, plant and equipment 1,115,100,000 Goodwill and other assets 1,135,700,000 -------------- Total assets $2,801,500,000 ============== Liabilities and Stockholders' Equity Current liabilities: Bank borrowings $81,900,000 Current portion of long-term debt 91,400,000 Accounts payable and accrued liabilities 437,600,000 -------------- Total current liabilities 610,900,000 Long-term debt 1,671,200,000 Pension and other long-term liabilities 266,900,000 Deferred income taxes 100,200,000 Minority interest 10,600,000 -------------- Total liabilities 2,659,800,000 Stockholders' equity: Preferred stock, 25,000,000 shares authorized, none issued or outstanding -- Common stock, par value $0.01 per share: Voting - 99,000,000 shares authorized; 25,806,469 shares outstanding 300,000 Nonvoting - 5,000,000 shares authorized 2,649,026 shares outstanding -- Additional paid in capital 237,100,000 Retained earnings 8,600,000 Common stock in treasury at cost, 1,901,450 shares (26,300,000) Accumulated other comprehensive loss (78,000,000) -------------- Total stockholders' equity 141,700,000 -------------- Total liabilities and stockholders' equity $2,801,500,000 ============== ----------------------------------------------------------------- [00003] HAYES LEMMERZ DEBTORS' CHAPTER 11 DATABASE ----------------------------------------------------------------- Lead Debtor: Hayes Lemmerz International, Inc. a.k.a Hayes Wheels International, Inc. a.k.a Hayes Wheels a.k.a Hayes Wheels International a.k.a Western Wheel Bankruptcy Case No.: 01-11490 Debtor affiliates filing separate chapter 11 petitions: Case No. Debtor Entity -------- ------------- 01-11493 Hayes Lemmerz International - California, Inc. 01-11495 Hayes Lemmerz International - Georgia, Inc. 01-11498 Hayes Lemmerz International - Homer, Inc. 01-11500 Hayes Lemmerz International - Howell, Inc. 01-11502 Hayes Lemmerz International - Huntington, Inc. 01-11504 Hayes Lemmerz International - Kentucky, Inc. 01-11505 Hayes Lemmerz International - Mexico, Inc. 01-11506 Hayes Lemmerz International - Ohio, Inc. 01-11507 Hayes Lemmerz International - Texas, Inc. 01-11508 Hayes Lemmerz Funding Company, LLC 01-11509 Hayes Lemmerz Funding Corporation 01-11510 HLI (Europe), Ltd. 01-11511 HLI Netherlands Holdings, Inc. 01-11513 Hayes Lemmerz International - CMI, Inc. 01-11516 Hayes Lemmerz International - Bristol, Inc. 01-11517 Hayes Lemmerz International - Cadillac, Inc. 01-11518 Hayes Lemmerz International - Equipment & Engineer 01-11519 Hayes Lemmerz International - Laredo, Inc. 01-11520 Hayes Lemmerz International - Montague, Inc. 01-11521 Hayes Lemmerz International - Pca, Inc. 01-11523 Hayes Lemmerz International - Petersburg, Inc. 01-11524 Hayes Lemmerz International - Southfield, Inc. 01-11525 Hayes Lemmerz International - Technical Center, Inc. 01-11526 Hayes Lemmerz International - Transportation, Inc. 01-11527 Hayes Lemmerz International - Wabash, Inc. 01-11528 HLI - Summerfield Realty Corp. 01-11529 HLI Realty, Inc. 01-11530 Hayes Lemmerz International Import, Inc. 01-11531 CMI - Quaker Alloy, Inc. 01-11532 HLI - Ventures, Inc. 01-11533 Industrias Fronterizas HLI, S.A. de C.V. Petition Date: December 5, 2001 Bankruptcy Court: United States Bankruptcy Court District of Delaware 824 Market Street, Fifth Floor Wilmington, Delaware 19801 Telephone (302) 252-2900 Bankruptcy Judge: The Honorable Mary F. Walrath Debtor's Bankruptcy Counsel: Eric Ivester, Esq. Skadden, Arps, Slate, Meager & Flom 333 West Wacker Drive Chicago, IL 60606 Telephone (312) 407 0700 - and - Mark S. Chehi, Esq. Skadden, Arps, Slate, Meager & Flom One Rodney Square Wilmington, DE 19899 Telephone (302) 651-3155 Fax (302) 651-3001 U.S. Trustee: United States Trustee for Region III 844 King Street, Suite 2313 Lockbox 35 Wilmington, Delaware 19801-3519 Telephone (302) 573-6491 Fax (302) 573-6497 ----------------------------------------------------------------- [00004] HAYES LEMMERZ DEBTORS' 50-LARGEST UNSECURED CREDITORS ----------------------------------------------------------------- Entity Nature Of Claim Claim Amount ------ --------------- ------------ Bank of New York Notes $402,860,800 Paul Schmarzel 5 Penn Plaza, 13th Floor New York, NY 10001 Tel: 212 896 7172 Fax: 212 586 7298 BNY Midwest Trust Company Notes $316,031,300 Dan Donovan 2 North LaSalle Street Suite 1020 Chicago, IL 60602 Tel: 312 827 8547 Fax: 312 827 8542 US Bank Trust N.A. Notes $249,515,800 Jim Kowalski 535 Griswold St. Suite 550 Detroit, MI 48226 Tel: 313 234 4716 Fax: 313 963 9428 Bank of New York Notes $233,046,500 Paul Schmalzel 5 Penn Plaza, 13th Floor New York, NY 10001 Tel: 212 896 7172 Fax: 212 586 7298 Hayes Lemmerz Inc. Pension Plan $30,000,000 Retirement Income Plan Arthur Doner, Jr. Comerica Bank Trustee 411 West Lafayette Detroit, MI 48226 Tel: 313 222 4159 Fax: 313 222 7041 Alcoa, Inc. Trade Debt $9,573,820 Richard Kelson 201 Isabella St. Pittsburgh, PA 15212 Tel: 415 533 4545 Fax: 415 533 4498 National Steel Corporation Trade Debt $4,770,451 Kirk A. Sobecki 4100 Edison Lakes Pkwy Mishawaka, IN 46545 Tel: 219 273 7000 Fax: 219 273 7579 Wheland Automotive Trade Debt $4,046,745 Industries Wayne Surbaugh 2800 Broad St. Chattanooga, TN 37402 Tel: 423 265 3181 Fax: 423 756 6089 Industrial Systems Trade Debt $3,581,707 Associates, Inc. Michael Bonner 3220 Tillman Dr. #200 Bensalem, PA 19020 Tel: 215 322 1100 Fax: 215 633 4425 The LTV Corporation Trade Debt $1,850,210 Thomas Garret, Jr. 200 Public Square Cleveland, OH 44114 Tel: 216 622 5000 Fax: 216 622 1931 Alcan, Inc. Trade Debt $1,833,283 Geoffery Merszei 1188 Sherbrooke St. West Montreal, Quebec H3A 3G2 Tel: 514 848 8000 Fax: 514 848 8115 Pechiney Sales Corporation Trade Debt $1,811,658 Olivier Mallet 475 Steamboat Rd. Greenwich, CT06830 Tel: 203 622 8300 Fax: 202 622 8322 McKechme Vehicle Trade Debt $1,756,104 Components USA, Inc. Stuart G. Moberly 5440 Corporate Dr. #100 Troy, MI 48098 Tel: 248 641 4700 Fax: 248 641 4731 Ann Arbor Machines Co. Trade Debt $1,246,870 Randy Biddix 5800 Sibley Rd. Chelsea, MI 48118 Tel: 734 475 0505 Fax: 734 475 4336 Wabash Alloys LLC Trade Debt $1,121,721 Greg Buller 4524 W. Old 24 Wabash, IN 46992 Tel: 219 563 7461 Fax: 219 563 5997 Wescast Industries, Inc. Trade Debt $1,049,565 Raymond T. Finnie 100 Water St. Wingham, Ontario Canada NOG 2W00 Tel: 519 357 4447 Fax: 519 357 4124 PPG Industries, Inc. Trade Debt $1,006,234 Raymond W. LeBoeuf One PPG Place Pittsburgh, PA 15272 Tel: 412 434 3131 Fax: 412 434 2571 Dubal America, Inc. Trade Debt $958,602 Julie Dayna 111 West Port Plaza, Suite 704 St. Louis, MO 63146 Tel; 314 434 3500 x 111 Fax: 314 434 2196 Hydro Aluminum Trade Debt $921,305 Louisville, Inc. Jeff Woosley 9400 Williamsburg Plz #120 Louisville, KY 40222 Tel: 502 426 7100 Fax: 502 423 8071 Rouge Industries, Inc. Trade Debt $920,350 Gary Latenderess 3001 Miller Road, Rm. 2377 Dearborn, MI 48121-2377 Tel: 313 323 1541 Fax: 313 845 0199 Kuntz Electoplating, Inc. Trade Debt $844,147 Paul Kuntz 851 Wilson Ave. Kitchner, Ontario N2C Tel: 519 893 7680 Fax: 519 893 5431 Spinie Manufacturing Trade Debt $834,976 Co., Ltd. W. George Sims 285 Massey Rd. Guelph, Ontario Canada N1K 1B2 Tel 519 763 0704 Fax: 519 763 2972 Boeing Capital Corp/ Trade Debt $751,072 MDFC Leasing Corp. Steve Vogodeing 4060 Lakewood Blvd. 6th Floor Long Beach, CA 90808 Tel: 562 997 3441 Fax: 562 997 3331 Lake Eric Steel Company Trade Debt $729,724 c/o Stelco Inc. Murk Steiman 100 King Street W. Hamilton, Ontario L8P 1A2 Tel: 905 528 2511 Fax: 905 577 4412 Auburn Foundry, Inc. Trade Debt $724,855 Thomas B. Walsh 635 W. 11th St. Auburn, IN 46706 Tel: 219 925 0900 Fax: 219 925 5137 Reich Industries Trade Debt $688,914 Peter Reich 4850 Commerce Dr. PO Box 218 Trussville, AL 35173 Tel: 205 655 2121 Fax: 205 655 2123 Albion Township Trade Debt $649,730 Ginny Schultz 25470 F. Drive S. Homer, MI 49245 Tel: 517 629 2289 DTR Industries Trade Debt $620,129 Dave Kraback 320 Snider Rd. Bluffton, OH 45817-9573 Tel: 419 358 2121 Fax: 419 358 9331 Asama Coldwater Trade Debt $582,066 Manufacturing Denny Durham 180 Asama Parkway Coldwater, MI 49036 Tel: 517 279 1090 Fax: 517 279 1091 Production Pattern Company Trade Debt $579,166 Tom Wilson 560 Solon Road Bedford, OH 44146 Tel: 440 439 3243 Fax: 440 439 0918 Henkel Surface Trade Debt $572,989 Technologies Russ Murphy 32100 Stephenson Hwy Madison Heights, MI 48071 Tel: 248 583 9300 Fax: 248 583 2976 Arcway, Inc. Trade Debt $567,931 Chief Financial Officer 8525 Clinton Road Cleveland, OH 44144 Tel: 216 651 9022 Fax: 216 634 2515 GE Capital Trade Debt $547,674 Chief Financial Officer 44 Old Ridgebury Rd. Danbury, CT 06810 Tel: 203 796 1000 Kromag Metallindurie Trade Debt $528,474 GesmbH Chief Financial Officer Leobersdorfer Strasse 24 A-2552 Hirtenberg Austria Tel: 022 56/81 12 54 30 Fax: 022 56/81 12 54 39 G&S Metal Trade Debt $516,866 Richard Panariello 50 Dimension Ave. Wabash, IN 46992 Tel: 219 569 9184 Fax: 219 563 0857 Comalco, Ltd. Trade Debt $476,267 Chief Financial Officer ACN 004 502 694 Level 25 12 Creek St. Bribane, Queensland Australia 4000 Tel: 61 7 3867 1711 Fax: 61 7 3867 1775 Honda of America Trade Debt $465,823 Manufacturing, Inc. Shinichi Sukamoto 2400 Honda Pkwy Marysville, OH 43040 Tel: 310 783 2000 Fax: 310 783 2110 E&R Industrial Sales Trade Debt $446,269 Ted Trimbath 408000 Enterprise Dr. Sterling Heights, MI 48314 Tel: 810 795 2400 Fax: 810 795 2553 Waupaca Foundry, Inc. Trade Debt $433,249 Gary Thoe 311 Tower Rd. PO Box 249 Waupaca, WI 54981 Tel: 715 258 6611 Fax: 715 258 9268 Missouri Public Service Utility Debt &430,938 Energy One 10700 E. 350 Highway Kansas City, MO 64138 Tel: 816 737 7445 Fax: 816 737 7921 Moeller Manufacturing Co. Trade Debt $390,347 David Mollering 30100 Beck Rd. Wixom, MI 48393 Tel: 734 416 0000 Fax: 734 416 2200 BASF Corporation Trade Debt $389,085 Hans U. Engel 3000 Continental Dr. N. Mount Olive, NJ 07828-1234 Tel: 973 426 2600 Fax: 973 426 2610 City of Gainesville Trade Debt $372,927 City Manager 118 Jesse Jewell Pkwy SE Gainesville, GA 30501 Tel: 770 535 5639 Michigan ARC Products Inc. Trade Debt $348,322 Jim Colosimo 2040 Austin Troy, MI 48083 Tel: 248 740 8066 Fax: 248 740 8067 Motion Industries, Inc. Trade Debt $330,048 William Stevens 1605 Alton Road Birmingham, AL 35210 Tel: 205 956 1122 Fax: 205 957 5290 Proper Mold & Trade Debt $325,303 Engineering, Inc. Chief Financial Officer 13870 E. 11 Mile Rd. Warren, MI 48089 Tel: 810 779 8787 Fax: 810 779 4530 Delphi Automotive Systems Trade Debt $319,335 Allen Dawes 5725 Delphi Dr. Tel: 248 813 2000 Fax: 248 813 2108 Stelco USA, Inc. Trade Debt $315,435 Mark Steiman 2855 Coolidge Hwy #203 Troy, MI 48084-3216 Tel: 248 649 3460 Fax: 248 649 1104 Lemforder Trade Debt $312,427 Albert Allen 55 Baker Blvd. Brewer, ME 04412 Tel: 207 989 1310 Fax: 207 989 8722 Gosiger, Inc. Trade Debt $312,164 Patrick Mara 4104 Bishop Lane Louisville, KY 40218 Tel: 502 962 8592 Fax: 502 962 9889 ----------------------------------------------------------------- [00005] COMPANY'S PRESS RELEASE ANNOUNCING THE CHAPTER 11 FILING ----------------------------------------------------------------- Hayes Lemmerz International Files Voluntary Chapter 11 Petitions -- To Restructure Its Debt and Strengthen Its Competitive Position -- Company Receives Commitment for Up to $200 million in DIP Financing; -- Action Affects Only Company's Operations in United States NORTHVILLE, Michigan -- December 5, 2001 -- Hayes Lemmerz International, Inc., (NYSE: HAZ), a leading global supplier of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components, announced today that it and its direct and indirect domestic subsidiaries and one subsidiary in Mexico have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code, to reduce their debt and strengthen their competitive position. The Company has received commitments for up to $200 million in debtor-in-possession (DIP) financing from a group of lenders led by CIBC World Markets Corp. that will be used to fund post- petition operating expenses and to meet supplier and employee obligations. "The Chapter 11 filings were precipitated by declining market conditions and the Company's excessive debt burdens," said Curtis Clawson, chairman and chief executive officer. "This step will give us the flexibility to reduce our debt and restructure our balance sheet. We fully expect to emerge from Chapter 11 as a stronger, more competitive company than we are today." "The overburdened debt structure arose from a number of recent developments, including a slow down in industry demand, a more challenging operating environment, and a series of cash acquisitions," Mr. Clawson added. International Operations Excluded From Filing and Remain Strong None of the Company's operations outside the U.S., with the exception of the Nuevo Laredo plant in Mexico, are included in the filing. There should be no impact on the ability of non-U.S. entities to continue to meet the needs of their customers and employees, and their financial obligations to their vendors and other creditors. The Company's joint ventures (in Portugal, Mexico, and Turkey) are also not included in the filings. "Our operations outside North America are stronger than ever. For example, we have increased capacity at our aluminum wheel facility in the Czech Republic, to meet strong demand," Mr. Clawson said. "Once the restructuring is complete, our international operations should be in an even stronger competitive position, because any uncertainties related to the parent company's financial situation will have been resolved." The Company's non-U.S. entities, not included in the filing, are as follows: Hayes Lemmerz International - Frenos, S.A. de C.V., Motor Wheel Corporation of Canada, Ltd., EMAC R&D Corporation, Hayes Lemmerz Mexico, S.A. de C.V., CMI - Europe Netherlands Holdings B.V., Hayes Lemmerz, S.p.A., Hayes Lemmerz Barcelona, S.A., Hayes Lemmerz Autokola, a.s., Hayes Lemmerz, Alukola, s.r.o., HL Holdings B.V., Hayes Lemmerz Holding GmbH, Hayes Lemmerz Hungary Consulting Limited Liability Company, Hayes Lemmerz Werke GmbH, Metaalgieterij Giesen Holding B.V., Metaalgieterij Giesen B.V., Metaal Industrie Bergen B.V., Hayes Lemmerz Manresa, SPRL, Hayes Lemmerz Werke Wohnungsbaugesellschaft mbH, Hayes Lemmerz Schenk GmbH, Hayes Lemmerz System Service GmbH, Hayes Lemmerz System Services N.V., Hayes Lemmerz Systems Services CR, s.r.o., Hayes Lemmerz Belgie, B.V.B.A., Hayes Lemmerz Comerico e Participacoes SRL, Hayes Lemmerz- Inci-Jant Sanayi, A.S., Borlem S.A. Empreendimentos Industrias, Borlem Alumino Ltda., Kalyani Lemmerz Limited, Automotive Overseas Investments (Proprietary) Limited, Siam Lemmerz Co., Ltd., Hayes Lemmerz Japan, Ltd., Hayes Lemmerz Fabricated Holdings B.V., Hayes Lemmerz Siam Co., Ltd., N.F Die Casting (Proprietary) Ltd., Vicbank Investments (Proprietary) Ltd., Dotz Wheels GmbH, and certain other entities. Company Will Fulfill Customer and Employee Obligations Mr. Clawson stressed that the Company expects that the restructuring process generally will have no impact on the Company's abilities to fulfill its obligations to its employees or to its worldwide customer base. "During the restructuring period and beyond, we will continue to operate as one of the world's leading automotive suppliers. We remain committed to providing the highest quality products and services, as our customers expect. Furthermore, we fully expect that our major vendors and customers will support the steps taken today as part of our program to remain one of the premier automotive suppliers. Vendors will be paid for all supplies furnished and services rendered after the filing date." "With our DIP financing and the protections provided under Chapter 11 for post-petition purchases, we are confident our suppliers and customers will continue to support us while we complete our restructuring. Moving forward, we will continue to service our existing customers, renew current contracts and develop new business," Mr. Clawson said. Through "first day" motions, the Company has requested that the Court authorize certain actions, including entering into the DIP financing arrangement, continuing wages and benefits to employees without interruption, and permitting the Company to pay certain pre-petition obligations to various businesses that are integral to the Company's operations including shippers. However, during the restructuring period, no principal payments will be paid on indebtedness incurred prior to the filing until a proposed plan of reorganization defining the payment terms has been prepared by the Company and approved by the Court. Operational and Management Changes at the Company While the Chapter 11 filing is intended to resolve the Company's balance sheet problem, Hayes Lemmerz has also been working to improve its operations. "Our recent actions to improve operational efficiencies prior to the filing have included major changes in our management team, an 11 percent reduction in salaried work force in our North American operations, additional early retirements, and closure of two under-utilized manufacturing plants," said Mr. Clawson. "We will continue to aggressively improve our operations so that we have the most satisfied customers, the lowest costs, and the best people in the industry. This restructuring plan is a necessary step toward these goals." In addition to Mr. Clawson, who was named chairman and CEO in August, new senior management at the Company include a new chief financial officer, a president of the recently formed North American Wheels Business Unit (a new position), a new president of the Suspension Components Business Unit, a new president of the Commercial Highway and Aftermarket Services Division, a vice president of Industry Relations (a new position), and a corporate vice president of materials and logistics (a new position). The previously announced plant closures involve facilities at Petersburg, MI, and Bowling Green, KY. Additional plant closures may be necessary to ensure operational efficiency. "Although Hayes Lemmerz has experienced operational problems at some facilities, our new management team is aggressively addressing those issues. We are confident that our financial restructuring will enhance the underlying strength of our global operations that have made us the market leader," Mr. Clawson said. "Since the recruitment of a new management team, starting with my appointment in August, we have been hard at work identifying and taking action on several business and financial opportunities," according to Mr. Clawson. The Company also noted that it has begun implementing several additional initiatives to improve operating efficiencies. These initiatives include: centralizing core functions such as engineering, purchasing and finance; increasing plant productivity by examining ways to reduce all forms of waste and rationalizing capacity in the plants; and building a top-grade team of the industry's most talented and dedicated employees. The Company is confident that these initiatives will ensure its long-term viability. Hayes Lemmerz common stock is listed on the New York Stock Exchange (NYSE: HAZ). Whether the stock will continue to trade on the NYSE following the Company's Chapter 11 filing is entirely at the discretion of the NYSE, the Company said. More information about Hayes Lemmerz is available on the Internet at: http://www.hayes-lemmerz.com and a detailed history of the Company, including its acquisitions since being founded in 1908, is available at: http://www.hayes-lemmerz.com/about/html/history.html Hayes Lemmerz International, Inc. is one of the world's leading global suppliers of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company has 46 facilities and 3 joint ventures and 14,000 employees worldwide. Of the total, 22 plants in the United States and one plant in Nuevo Laredo, Mexico are included in the Chapter 11 filings. ----------------------------------------------------------------- [00006] DEBTORS' MOTION TO PAY PREPETITION CRITICAL VENDOR CLAIMS ----------------------------------------------------------------- Prior to the Petition Date, the Debtors implemented certain internal procedures designed to limit the Debtors' expenditures. In the weeks leading up to the Petition Date, Kenneth A. Hiltz, Hayes Lemmerz's Chief Financial Officer and Chief Restructuring Officer, relates, the Debtors attempted to pay, to the greatest extent possible, only those vendors that the Debtors believed are or would be critical to a restructuring. By this Motion, the Debtors ask the Bankruptcy Court for authority to pay up to $40,000,000 of Critical Vendor Claims. This amount, Mr. Hiltz notes, represents less than 1.5% of the Debtors' total liabilities as of the Petition Date. Mr. Hiltz is convinced that these payments are necessary to ensure that the Debtors continue receiving adequate amounts of trade credit on a postpetition basis. Mr. Hiltz explains that the Company's Management did thorough review of their accounts payable and their list of prepetition vendors to identify those vendors who are essential to operations. In determining the amount of claims the Debtors are seeking to pay, the Debtors consulted with the controllers of each of their facilities and others throughout the Debtors' management and purchasing operations to identify those creditors that are most essential to the Debtors' operations. Decisions about which vendors are or aren't critical focused on four criteria: (a) whether the vendor in question was a "sole-source" vendor; that is, whether the Debtors could readily obtain the vendor's product elsewhere, (b) whether certain quality control requirements of the Debtors' OE customers prevent the Debtors from looking to alternative sources for a vendor's products, (c) whether the Debtors receive advantageous pricing or other terms from a vendor such that replacing such vendor postpetition would result in significantly higher costs to the Debtors, and (d) whether a vendor might be forced to cease business operations in the event its prepetition claim against the Debtors was not paid within a short time after the Petition Date. After evaluating the information received in response to these inquiries, the Debtors estimated the amount necessary to pay to ensure the continued supply of critical goods and services, taking into account whether the failure to pay a Critical Vendor's claims would result in the Critical Vendor terminating its provision of goods and services to the Debtors and what portion of the Critical Vendor's claims would need to be paid in order to induce it to continue providing goods and/or services to the Debtors. The $40,000,000 Critical Vendor Claims Cap represents this estimated amount. In order to ensure the future supply of critical goods and services, the Debtors propose to condition the payment of Critical Vendor Claims on the agreement of individual Critical Vendors to continue supplying goods and services to the Debtors on the trade terms that such Critical Vendor provided goods and services to the Debtors on a historical basis prior to the Petition Date, or such other favorable trade practices and programs that are at least as favorable to the Debtors as those in effect during such time. If a vendor does not continue to extend Customary Trade Terms following the payment of a Critical Vendor Claim, the Debtors propose that: (a) any payment made to such vendor on account of a Critical Vendor Claim be deemed to be a postpetition transfer recoverable by the Debtors in cash upon written request without giving effect to any rights of setoff, claims, provision for payment of reclamation or trust fund claims, or otherwise and (b) upon recovery by the Debtors, any such Critical Vendor Claim shall be reinstated as a prepetition claim as if the payment had not been made. Some of the Critical Vendors also may have obtained mechanics' liens, possessory liens, or other, similar state law trade liens on the Debtors' assets, based upon Critical Vendor Claims held by such vendors. As a further condition of receiving payment on a Critical Vendor Claim, the Debtors propose that a Critical Vendor must agree to take whatever action is necessary to remove the Trade Lien. J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom, makes it clear to the Court that the Debtors seek authority to make Critical Vendor Payments. They do not ask the Court to direct or require them to make any specific payments. All payments to Critical Vendors will be based on the reasonable exercise of the Debtors' business judgment. Mr. Ivester stresses that the Debtors believe payment of Critical Vendor Claims is necessary to effect their successful reorganization in these cases. If this Motion is not granted, the Critical Vendors are likely to discontinue providing goods to the Debtors on Customary Trade Terms, effectively reducing the amount of credit available to the Debtors. Moreover, the Debtors believe that certain of the Critical Vendors might cease to do business with the Debtors altogether, resulting in the Debtors' inability to obtain certain essential goods and services and forcing the Debtors to incur higher costs. That actions would be harmful -- if not devastating -- to the Debtors, their estates and creditors. Mr. Hiltz tells the Court that the Company's $40 million request has far-reaching consequences if it is not approved: "I believe that a failure by the Debtors to ship their products to a given OE customer at the required time would cause significant disruption to the entire supply chain involving the Debtors and such customer, with resulting effects throughout the industry. "If, for example, the Debtors failed to provide wheels needed for the manufacture of a particular automobile, that OE customer's assembly plants with respect to that automobile could shut down. Additionally, the shutdown of the OE customer's auto assembly plants would possibly lead to a shutdown of the plants of other suppliers of components for the automobile in question because the suppliers would not be able to deliver their production output. "The magnitude of a significant impairment of the Debtors' production could be felt throughout the world. In the automotive sector, the Debtors are a sole-source provider of a critical component of practically every vehicle produced in the United States. In the heavy-duty sector, the Debtors supply critical parts for as much as 80% of the products made by such customers. Furthermore, the Debtors supply a majority of the major OE companies worldwide. To put the situation in perspective, if the Debtors were unable to ship product for an extended period, as a result of failure to obtain the goods or services necessary to the manufacture of their products, almost every major OE manufacturer in the Americas and many of those in Europe may suffer a shutdown of their manufacturing facilities. The economic consequences of a shutdown of the Debtors' production facilities would thus be severe and global, with repercussions for the Debtors, their customers, and the economy generally. "In addition to macro-economic repercussions, I believe that a shutdown of the Debtors' manufacturing facilities would essentially kill any chance of a successful reorganization; indeed, even the mere threat of a shutdown could lead to disastrous consequences. If it appears that the Debtors will be unable to meet their customers' requirements due to a disruption in the Debtors' manufacturing operations, I think it is likely that the OE customers will seek a less risky source for the parts they require, whether or not such a disruption actually occurs. "In my opinion, in light of the bankruptcy filing, it is imperative that the Debtors make a strong statement to customers -- by paying critical vendors -- that the Debtors will be able to supply product on time as usual. Such a payment will further help to ensure that the Debtors are able to sustain a sales level necessary to fund a reorganization plan," Mr. Hiltz says. *** End of Issue No. 1 ***