NEW YORK (Reuters) - Auto parts maker Chassix Holdings Inc filed for bankruptcy on Thursday with a prearranged plan to transfer ownership to bondholders after failing to keep up with a boom in demand for auto supplies.
Tom Gores' Platinum Equity Advisers, Chassix's current equity owner, signed onto the proposal to cut company debt by 68 percent, from $680 million to $217 million, the company said in papers filed in U.S. Bankruptcy Court in Manhattan.
Chassix blamed a 2014 spike in demand for chassis components and powertrain products from customers like Ford, BMW and Nissan, saying its inability to keep up led to an "onslaught of quality issues and missed release dates" that increased manufacturing costs.
U.S. auto output has risen more than 50 percent since 2009, when GM and Chrysler filed for Chapter 11 bankruptcy. Chassix said it faced increased demand at a time of "limited capacity" in machining and casting sectors. It missed a December bond payment.
Chassix's Bristol, Indiana, facility was hit hardest, facing losses of $16 million per month, it said.
Its proposed restructuring would convert $375 million of senior bonds into 97.5 percent of new equity, with holders of $158 million of unsecured bonds getting the rest.
Chassix, whose non-U.S. units are not included in the bankruptcy, would receive $100 million in financing from existing bondholders and $150 million from PNC Bank.
The plan will need court approval, and details often change during bankruptcy. The proposal has the support of Platinum Equity, as well as a committee of 80 percent of the company's unsecured bondholders and about 72 percent of secured holders.
Bondholders include Oaktree Capital Management and Avenue Capital Group, court papers show.
Chassix's customers play a key part in the deal, whose terms provide $45 million in annual price increases and new business, accelerates payment on some outstanding orders, and provides for continued funding of Chassix's Bristol facility.
Chassix, with about 3,500 employees, was formed in 2012 when Platinum purchased and integrated a handful of parts makers. Chassix makes steering knuckles, wheel hubs and other chassis components for cars like Chrysler's Jeep, Ford's Mustang and BMW's X5.
Reporting by Nick Brown; Editing by Leslie Adler