Wholesale Distribution

ATD’s Lenders Support the Chapter 11 Reorganization Plan

Posted on October 5, 2018

American Tire Distributors Inc. (ATD) has reached an agreement in principle with holders of a majority of its term loans to support a restructuring plan that will reduce its debt by approximately $1.1 billion and increase financial flexibility.

The restructuring agreement was announced on Oct. 4 and required the company to voluntarily file for reorganization under Chapter 11.

The agreement with term loan lenders announced on Oct. 5 supports all three categories of ATD’s debt holders.

“We are pleased to have the support of our term loan lenders for our previously announced restructuring support agreement, which will help to facilitate a fully consensual court-supervised process,” says Stuart Schuette, chief executive officer of ATD.

“The strong support by our key financial stakeholders for our recapitalization plan represents an important vote of confidence in our business and our future. We intend to move quickly through this court-supervised process and continue our ongoing transformation to lead change in our industry.”

Under the terms of the agreement, which is subject to court approval and final documentation, the term loan lenders will, among other things:

  • provide half of the $250 million in new financing to support ATD’s continuing operations;
  • extend the maturity of the term loan facility by three years; and.
  • participate in exit financing upon ATD’s completion of the court-supervised process.

Approval of First Day Relief

In addition, ATD has received court approval of all of its key First Day motions that will support the business. The approved motions give ATD the authority to, among other things, enter into post-petition financing, continue to utilize its cash management system and continue to pay critical suppliers and vendors in full under pre-existing trade terms.

ATD says it intends to meet its obligations in the ordinary course and expects its operations to continue uninterrupted throughout the court-supervised process.

“The Court’s approvals of our First Day motions are an important step forward that will allow the company to continue meeting our obligations and providing our customers the unparalleled selection and service they have come to expect from us,” says Schuette.

“This positive momentum would not be possible without the commitment of our associates. On behalf of our management team, we thank them for their hard work and continued focus on enabling ATD to support our customers across all channels, and the consumers they serve.”

Additional Information

As previously announced on Oct. 4, 2018, ATD has entered into a definitive agreement with approximately 75% of its bondholders on the terms of a recapitalization that would reduce the ATD’s debt by approximately $1.1 billion. To implement the definitive agreement ATD voluntarily filed for reorganization under Chapter 11 in the District of Delaware. ATD’s operations across its distribution network are continuing to serve customers without disruption as it moves through this process.

More information is available on ATD’s restructuring website at www.ATDrecapitalization.com or by calling ATD’s restructuring hotline, toll-free in the U.S., at (866) 967-0495. For calls originating outside of the U.S., please dial +1 (310) 751-2695. Questions can also be submitted by email to ATDinfo@kccllc.com. Court filings and other documents related to the court-supervised proceedings are available on a separate website administered by ATD’s claims agent, KCC, at www.kccllc.net/ATD.

For MTD's coverage of ATD’s reorganization under Chapter 11, read:

"ATD’s Top 30 Creditors"

"Answers to 31 FAQs About ATD's Chapter 11 Filing"

"ATD Voluntarily Files for Chapter 11 Reorganization"

Related Topics: ATD, ATD financials, bankruptcy, wholesale

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