Dana files for bankruptcy protection

[Meister]

DETROIT -- Dana Corp. -- the 100-year-old company that supplied parts to the Model T, the World War II-vintage Jeep and the classic London taxicab -- sought Chapter 11 bankruptcy protection Friday in New York.

The filing ended several weeks of speculation about the deteriorating financial condition of the axle, driveshaft and heavy components manufacturer based in Toledo, Ohio.

Dana becomes the second major automotive supplier to seek reorganization in the last five months. Delphi Corp., the former parts making unit of General Motors, filed for bankruptcy protection Oct. 8.

Dana supplies components for a significant number of platforms at Ford Motor Co. and GM. About 25 percent of Dana's business in 2004 was with Ford, according to Dana's annual report. Another 11 percent of its business was with GM that year.

CEO Mike Burns, who took Dana's helm in March 2004 after a 34-year career at GM, has been restructuring the company for the last few months, but the effort gained little traction on Wall Street. Dana's stock has been in a tailspin since the start of the year.

Burns said last week that the company was in negotiations with its bankers and hoped to reach an agreement on new lines of credit in two weeks. Dana missed a $21 million bond interest payment on Wednesday, March 1.

Dana has been beset by multiple challenges in recent months, including a federal accounting probe, declining business from Ford and GM and higher raw material costs. The company posted a $1.23 billion loss through the first nine months of 2005 -- all but $20 million of the loss stemmed from one-time charges and write-downs.

Without new lines of credit, the Chapter 11 filing was inevitable for the company, analysts said.

"Failure to obtain a new (credit line) facility would lead to default and likely bankruptcy," S&P analyst Daniel DiSenso wrote in a report Thursday, March 2. Both S&P and Moody's Investors Service downgraded Dana's credit ratings for the second time in a week on Thursday.

The missed interest payment prompted the second major sell-off of Dana stock in five trading days. Shares in the company closed Thursday at $1.04, down 44 percent, in massive trading on the New York Stock Exchange. Reuters reported that the closing price was an all-time low, but the New York Stock Exchange could not confirm that benchmark. The stock on Feb. 24 fell 52 percent.

Dana, which employs about 45,000 people globally, would be the third-largest automotive bankruptcy case in history, based on total assets, behind Delphi and Federal-Mogul Corp. Dana ranks No. 15 on the Automotive News list of the top 100 global suppliers with worldwide original-equipment automotive parts sales of $9.06 billion in 2004. It listed $7.88 billion in assets on Sept. 30, 2005.

You may e-mail Philip Nussel at pnussel@crain.com

[haas]

Welcome to the new manufacturing world in North America,

Where I live , so many of the toolshops are suppliers to Dana, This is going to be really , really bad ..

2nd major automotive supplier????, what about C & A ??