Automotive supplier Marelli has filed for Chapter 11 bankruptcy protection in the US.
The company, which was formed from the merger of Magneti Marelli in Italy and Calsonic Kansei in Japan in 2019 and is a major supplier to struggling car maker Nissan, which is also on the brink of collapse.
The Chapter 11 process secures commitment for $1.1bn debtor-in-possession (DIP) financing from 80% of lenders to keep the business running in the face of the automotive industry downturn.
The company says it does not expect any operational impact from the chapter 11 process, and will continue to work closely with its customers, suppliers and partners. Part of the challenge is the development of new technologies for ADAS safety systems and the shift to software defined vehicles.
This is important for Infineon Technologies in Germany as a major supplier of semiconductors.
Many automotive suppliers are struggling as the downturn in the industry continues. Wolfspeed is similarly on the verge of Chapter 11 protection in the face of a cash crunch.
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“We have been proactive in making necessary adjustments to stabilize our financial position so that we can continue to deliver long-term benefits for our valued customers, partners and employees,” said David Slump, President and CEO of Marelli.
“While we are pleased with our recent progress and profitability, industry-wide market pressures have created a gap in working capital that must be addressed. After careful review of the Company’s strategic alternatives, we have determined that entering the chapter 11 process is the best path to strengthen Marelli’s balance sheet by converting debt to equity, while ensuring we continue operating as usual. Taking this action now provides access to new liquidity to fund our long-term growth and innovation pipeline, and ensures our customers and partners all over the world can continue to rely on Marelli for on-time delivery of advanced technologies that shape the vehicles of the future.”
“Marelli’s focus on innovation, digitalization and technology has never been stronger. As we move through this process, we will continue to serve our customers and work with our suppliers and partners as they have come to expect. We are also grateful for the hard work and dedication of our employees who remain focused on delivering the best service possible.”
Once court approval is granted, the DIP financing, coupled with cash generated from the Company’s ongoing operations, is expected to provide sufficient liquidity to support the Company through the chapter 11 process over the next two months.
The deal covers 74 subsidiaries, including Marelli Lighting UK as well as Marelli France, Marelli Germany, Marelli Europe and Marelli R&D as well as subsidiaries in China and the US.
The company has a dedicated page on the process at www.marelliforward.com with other details at www.veritaglobal.net/Marelli
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