Dana Files For Bankruptcy

Posted on March 3, 2006

Dana Corp. said that its U.S. operations have filed for bankruptcy protection, succumbing to declining production at large U.S. customers and high materials costs. The first large U.S. auto parts maker to file for Chapter 11 protection from creditors in 2006, the company cited general industry financial deterioration and its inability to renew or expand credit facilities in a timely matter. The filing covers Dana and 40 U.S. subsidiaries. It excludes Dana's European, South American, Asia-Pacific, Canadian and Mexican subsidiaries, which are operating as normal, Dana said.

While its non-automotive axle and driveshaft businesses have reported healthy sales, Dana has run into numerous rough spots in the past year beyond raw materials costs and declining market share at key North American automotive customers Ford and General Motors Corp. The filing did not surprise industry analysts. Dana, which was in talks with lenders on financing alternatives, on Wednesday announced it had failed to make $21 million of bond interest payments. Dana shares were down 26 cents, or 25.5 percent, to $0.67 on the New York Stock Exchange following the announcement.

The company last October announced plans to cut jobs, plants and non-core business and shift some production to lower-cost areas to focus its operations, something that will continue under the Chapter 11 reorganization, it said. Dana posted losses totaling $1.23 billion through the first nine months of 2005. Dana reported total assets of $7.9 billion and liabilities of $4.7 billion, on a consolidated basis, as of Sept. 30.