toledoblade.com -- Dana Corp. files for bankruptcy protection

Hampered with declining revenues and reduced cash, Toledo’s Dana Corp. today filed for bankruptcy protection in U.S. Bankruptcy Court in New York.

The nearly 102-year-old auto supplier has secured $1.45 billion in financing to keep running during Chapter 11 bankruptcy proceedings, the company announced today.

“The Chapter 11 process allows us to continue normal business operations while we restructure our debt and other obligations and enhance performance,” Dana Chairman and Chief Executive Mike Burns said in a statement. “We want to assure everyone — out customers, suppliers, our people, and our communities — that Dana is open for business as usual.”

Dana plans to pursue its recently announced restructuring plans, which calls for selling three businesses and trimming 700 of 1,950 jobs in the region.

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Dana, which makes brakes, axles and other parts, has been in a downward spiral since the company announced last fall that it was restating earnings and lowering its profit forecast for 2005 because of accounting errors.

The auto supplier with 46,000 workers worldwide said in January that it lost nearly $1.3 billion in the third quarter last year while realigning its business.

The company said it filed for Chapter 11 protection so it could fix financial and operational problems. The filing was entered in the U.S. Bankruptcy Court for the Southern District of New York.

“The general financial condition of the industry, together with Dana’s inability to renew or expand its credit facilities in a timely manner, has significantly constrained Dana’s liquidity,” the company said in a statement.

Trading of Dana’s stock was halted on the New York Stock Exchange just before the announcement. Shares fell 37 cents to 67 cents today before trading stopped. The stock had been as high as $17.03 in the past year.

In 2000, Dana had more than 6,400 employees at 11 Indiana plants. Since then the company has downsized, selling factories and announcing plans to close and sell more, trimming its work force in the state to 2,000.

The filing does not affect the company’s businesses in Europe, South America, Asia, Mexico or Canada, the company said.

Auto parts suppliers over the last year have been sandwiched by rising energy costs that have driven up the costs of raw materials and driven down demand for gas guzzling sport utility vehicles and pickup trucks.

Delphi Corp., the nation’s leading parts supplier, filed for Chapter 11 bankruptcy protection in October. Visteon Corp., the nation’s second biggest auto parts supplier, is closing three plants and putting another six up for sale under its restructuring plan.

Suppliers say the restructuring moves also are being forced by automakers increasing pressure to sell them parts at lower prices.

Toledo-based Dana supplies parts to General Motors Corp., Ford Motor Co. and other automakers.

Before the filing, Dana announced plans last year to cut its salaried work force by 5 percent, close three plants in North America and Australia and sell parts of its business to sharply reduce costs.

Dana in December lowered profits by $44 million for a period starting in 2000 and ending in June. The changes were caused by improper accounting for customer pricing increases and supplier reimbursement costs in the company’s commercial vehicle unit, Dana said.

The U.S. Securities and Exchange Commission earlier this month said it was opening an investigation into Dana’s financial practices and whether the company violated federal securities laws.

The company that began as Spicer Manufacturing Co. took on its current name in 1946. Dana in 1998 bought axle and brake maker Echlin Inc. in what was one of the biggest mergers in the auto parts industry. The move increased its overall employment to 79,000 workers.

Read more in later editions of The Blade and toledoblade.com.

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