For the second time in six years, American Tire Distributors Inc. (ATD) has filed Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware. ATD says it's a necessary step as it undergoes a reorganization including the option of a new ownership plan. In a statement, ATD says it has entered into a "restructuring support agreement" with certain lenders, including accounts and credit funds managed by: Guggenheim Partners Investment Management LLC, KKR, Monarch Alternative Capital LP, Sculptor Capital Management Inc., and Silver Point Capital L.P. ATD says those lenders represent "approximately 90% of the outstanding obligations under the company's term loan." Collectively, this group, known as the "ad hoc lender group" is considering new ownership for ATD through a competitive sale process. "The company and ad hoc lender group are in discussions with respect to an asset purchase agreement that, if implemented, would transition ownership of the company to the members of the ad hoc lender group. "The contemplated transaction would also eliminate a significant amount of debt and provide access to new capital, positioning the business as a stronger partner to manufacturers and customers who rely on ATD to improve their productivity, profitability and performance." When ATD filed for bankruptcy protection in October 2018, it completed the process with before year's end. In the meantime, ATD says it will continue to operate its network of 115-plus distribution centers that serve 80,000 customers across the U.S. The company says it will continue to support its manufacturer suppliers and continue to provide tires, wheels and other tools to its customers. To guarantee those continued operations, ATD says the ad hoc lender group has committed $250 million in new financing, as well as access to $1.2 billion in financing from lenders under the company's pre-petition ABL facility in the form of post-petition financing. As long as the bankruptcy court approves, the post-petition financing credit, combined with cash generated from the ongoing business operations, "is expected to provide sufficient liquidity to support the business during the process." In ATD's statement, Interim CEO Michael Feder said: "For nearly 90 years, ATD has continuously evolved to meet the dynamic shifts and challenges facing the auto aftermarket. Today, we are taking further steps to position ATD for our next phase as a stronger distribution partner to our manufacturers and customers as we return to our roots and hone our core value proposition as a wholesale distributor. "We are confident that entering into this process with the support of the Ad Hoc Lender Group will enable ATD to execute its business strategy and achieve our long-term objectives. "Since being named interim CEO, I have seen how impactful our business is to the manufacturer partners, customers, associates, and communities we support, and this process will serve to reinforce those relationships. Our operations remain steady and, by moving forward with new owners on stronger financial footing, I am confident that we will build on our proud history of leadership and innovation. "Above all else, I want to thank our associates, whose commitment has been essential to our success. Their hard work and dedication are the cornerstones to continue delivering for our customers and manufacturer partners." ATD's reorganization will be supervised by the court. There will be customary motions and reports filed throughout the process. ATD has a dedicated website with information: www.ATDNext.com. Court filings and proceedings, including how creditors can file a claim, is available on a website administered by ATD's claims agent, Donlin Recano & Company,: www.donlinrecano.com/atd.ATD Will Continue to Operate
A Word From the ATD Interim CEO
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