American Suzuki Motor receives bankruptcy court approval of up to $100M in Debtor-In-Possession (DIP) financing
American Suzuki Motor Corporation (ASMC) has received court approval for Debtor-In-Possession (DIP) financing. As a result, the Company will be able to borrow up to $50 million for operations and up to $50 million for purchases of inventory from Suzuki Motor Corporation (SMC). These funds will help ensure that ASMC has the cash necessary to operate its business during the pendency of the chapter 11 case. (Earlier post.) The motion was previously granted Court approval, on an interim basis, on 7 November.
ASMC intends to use a portion of the DIP funds to purchase and ship 2,500 additional cars from Japan to the continental US, which have been manufactured since ASMC announced its restructuring. Earlier this week, the company released its November 2012 sales numbers, reporting that it sold more than 2,200 units last month, an increase of 22% compared to the same period last year.
As previously announced, ASMC is continuing to market and sell its remaining US automobile inventory through its national network of automotive dealers. Further, ASMC continues to provide marketing and incentives to help promote the continued sale of the automobiles remaining in dealer inventory and the pipeline. All automobile warranties will continue to be fully honored in accordance with their terms, and parts and service will continue to be provided to consumers through ASMC’s parts and service dealer network. As of 30 November, automotive dealers representing all of the top 50 and more than 98% of the total volume of ASMC’s continental US automobile sales have agreed to transition to parts and services operations.
ASMC announced on 5 November that it plans to realign its business to focus on the long-term growth of its motorcycles/ATV and marine divisions and to wind down and discontinue new automobile sales in the continental US. ASMC determined that the best path to achieve this realignment in an efficient and orderly manner was to restructure its operations under chapter 11. The case was filed in the United States Bankruptcy Court, Central District of California in Santa Ana.