Automotive News - June 30, 2008 - (Page 37)

JUNE 30, 2008 • 37 After 20 months, Dura departs Chapter 11 Andrew Grossman and Philip Nussel agrossman@crain.com DETROIT — Auto supplier Dura Automotive Systems Inc. on Friday confirmed it has emerged from Chapter 11 bankruptcy protection after 20 months. A U.S. Bankruptcy Court judge in Wilmington, Del., approved the company’s reorganization plan May 13, and Dura officially emerged from court protection Wednesday, June 25. “This has been an extremely difficult process,” CEO Larry Denton said in an interview with Automotive News. “It is a credit to our team to have been able to exit protection in this environment.” Denton, 57, will remain CEO of the company but is stepping down as chairman. Dura’s newly appointed board is naming longtime supply chain executive Tim Leuliette as chairman. Leuliette, 58, last year stepped down as CEO of Metaldyne Corp. and now heads Leuli- ette Partners LLC. After years of borrowing to acquire smaller suppliers, Dura had built a debt-to-equity ratio of 12.1 before it went into bankruptcy. Through bankruptcy, it reduced its debt ratio to 1.5. Dura’s reorganization plan called for senior-level debt and unsecured claims to receive 100 percent of the stock in the reorganized company. Dura said its pre-bankruptcy subordinated debt and stock equity were wiped out. Larry Denton: Keeps CEO post Tim Leuliette: New chairman gional hubs that allow it to supply U.S. auto plants from Mexico and western European plants from eastern Europe. Supplying the United States from Mexico has helped Dura escape the fate of suppliers that moved to China and now are being squeezed by fuel costs, Denton said. Growth in India Hedge fund operator Pacificor LLC, of Santa Barbara, Calif., will be the largest shareholder of the reorganized Dura, controlling between 35 and 40 percent of the equity, Denton said. Blackstone Group LP, a New York private equity firm with several automotive holdings, will be Dura’s second-largest shareholder. The new Dura stock will trade over the counter under the symbol DRRAQ. Dura leaves bankruptcy with a realigned network of factories largely in low-cost countries. It has set up reDura also has shifted production to China and India, but Denton said 80 to 90 percent of the parts produced there are for local markets. He said the company has exceeded growth targets by five times in India and is building relationships with such Indian automakers as Tata Motors and Mahindra & Mahindra Ltd. “I don’t see any stopping us,” Denton said of the move to India. “I think this is going to continue to move.” Dura also has shifted its sales overseas. The company estimates that the United States will make up only 24 percent of 2008 sales. It predicts Eu- Key moves Faced with heavy debt, Dura in recent years took on various restructuring efforts, back-office consolidation, asset sales and plant closings — even before entering bankruptcy. Denton said those moves were key to a successful reorganization. “We started operational restructuring before we filed,” Denton said. “We knew there were troubled times ahead.” rope will make up 52 percent. Ford Motor Co. remains the largest customer, Denton said, but a large portion of Dura’s sales to Ford are to European plants or its recently sold Land Rover and Jaguar brands. Chrysler LLC is Dura’s second-largest customer. Volkswagen AG is the third-largest, and Renault-Nissan is the fourthlargest. Dura makes a variety of parts, including seating controls, glass systems, door modules and hinges. The company filed for Chapter 11 protection in October 2006. It was one of several major U.S. auto suppliers, including Delphi Corp. and Dana Corp., that had sought protection in recent years because of lower North American vehicle production and higher raw material costs. Dura ranks No. 88 on the Automotive News list of the top 100 global suppliers, with worldwide originalequipment automotive parts sales of $1.89 billion in its 2007 fiscal year. c TATA Automaker’s CEO takes notes and asks questions continued from Page 3 came calling on Aron’s dealership. Aron laid out a spread of fresh fruit, decorated with small Indian flags. Aron’s wife made a trip to the grocery to buy Tetley tea to serve the group, since they learned that the Tata family owns the Tetley brand. As Tata strolled through the dealership, his managing director for global automotive activity, Ravi Kant, sat down across the desk from Aron and asked a few questions. “Can I tell you what he wanted to know?” Aron asks in mild amazement. “ ‘Mr. Aron,’ he said to me, ‘How many technicians do you have here? What is your profit margin on parts? What is your absorption rate?’ ” Aron says, referring to the percentage of a dealership’s operating costs covered by the service department. “What is your absorption rate! Can you imagine the head of an automaker bothering to travel around the world to sit here and talk to me about such day-to-day business details? And he wrote down my answers!” New Denso chief sees flat ’08 sales Hans Greimel hgreimel@crain.com Moving metal Tata Group will need more than dealer enthusiasm to restore the fortunes of Jaguar and Land Rover. In 2002, Jaguar sold 61,204 vehicles in the United States. Last year, it sold 15,683. Land Rover’s U.S. sales have grown in the same period: 49,550 in 2007, compared with 40,987 in 2002. But Land Rover’s sales are down 23.5 percent so far this year in the face of expensive gasoline. Jaguar, when owned by Ford, had once hoped that its U.S. dealers would sell up to 100,000 vehicles a year. Jaguar customers have embraced the justlaunched XF sedan. More than a few dealers have reported they are sold out of their XF allocation for the year. A re-engineered XJ sedan is due next year. The oft-requested convertible, an on-again/off-again proposal since 2001, is supposedly again on the table. Jaguar’s and Land Rover’s challenge is daunting because they compete against the best global brands: Mercedes, BMW, Lexus and Infiniti. BMW, for instance, now makes a fleet of Rover-fighting SUVs. Moreover, Tata’s new luxury auto business Indian industrialist Ratan Tata made a warm impression on U.S. Jaguar and Rover dealers. volve the fabled Italian design house, Pininfarina S.p.A., in more Jaguar designs. Tata officials could not be reached to confirm that plan. as much by my own father as I was hugged by him. ALLEN ARON Jaguar dealer “ I was never hugged Nice hotel On the West Coast, the new owners called on dealers in San Francisco. The group was treated to lunch at the Campton Place hotel. Not coincidentally, Campton is owned by the Taj Hotels Resorts and Palaces group, another of Ratan Tata’s holdings. Over lunch, the new CEO Smith told Rover dealers that shedding vehicle weight to improve fuel economy will be a top Land Rover priority — probably by switching from steel to aluminum components where possible. Between bites, a Jaguar dealer asked Tata to consider a new XK-E — the iconic British sports car of the 1960s that introduced many buyers to the brand. According to those in the room, Tata smiled and nodded as he wrote down the suggestion, agreeing, “That would be an interesting project.” c ” will not have the chairman’s undivided attention. The family-owned conglomerate operates 98 companies in seven business segments. But Tata obviously intends to make changes. It is moving the companies’ North American headquarters out of California, where Ford placed them, to return them to the East Coast to be closer to their British factories. According to one of the dealers who visited with Tata, the Indian corporation indicated it wants to in- TOKYO — The new CEO of Denso Corp. is warning that flat sales in North America will keep sales similarly flat this year at the Japanese auto parts maker. Nobuaki Katoh, 59, former head of thermal systems at Denso, took office Wednesday, June 25, saying business will be “historically harsh.” “We project net sales holding generally flat year on year at 4.03 trillion yen ($38.38 billion), primarily due to slowing automobile production in North America,” Katoh said in a statement. “Furthermore, we anticipate the loss of sales growth momentum to be joined by a widening foreign currency loss from a strong yen and ongoing rises in raw materials prices.” Operating income is expected to fall 17.1 percent to $2.75 billion, Katoh said. In April, Denso announced that Katoh, a 37-year Denso veteran, would succeed Koichi Fukaya, who was promoted to vice chairman. Katoh was president of Denso’s European operations before being named senior managing director in charge of heating and air Nobuaki Katoh: New Denso CEO conditioning in 2007. The outlook at Denso — the world’s largest auto supplier in terms of revenue — marks a dramatic reversal from the fiscal year that ended March 31. Last year sales climbed 11.5 percent to $38.30 billion, while operating profit surged 15.0 percent to $3.32 billion. Denso is shifting its longtime focus from supporting overseas expansion of Japanese automakers to supplying regional players and emerging markets for low-cost cars, Katoh said. He cited the establishment of Denso International Asia Co. in Thailand as an element of the push to supply the growing number of automakers making that country a regional hub. Denso ranks No. 1 on the Automotive News list of the top 100 global suppliers, with estimated worldwide parts sales to automakers of $37.51 billion in its 2007 fiscal year. c

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