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Published: 10/21/2007

Dana refines amount of repayments to unsecured creditors

BLOOMBERG NEWS SERVICE

Dana Corp., the Toledo auto-parts maker planning to exit bankruptcy by Jan. 1, expects to pay unsecured creditors from 72 percent to 86 percent of the $3 billion they are owed, the company said.

Dana revealed a narrowing of the projected range of reimbursement in a new reorganization plan filed Friday in U.S. Bankruptcy Court in New York City.

An earlier plan said creditors would receive 69 percent to 90 percent of their claims. Both projections were based on a company value of $4 billion.

The new plan increased to $790 million from $750 million the amount Dana expects to raise from new preferred stock.

The extra $40 million is earmarked for unsecured creditors not eligible to participate in the stock offering.

Dana will give from 5 percent to 10 percent of the reorganized company s common stock to management.

The company said in the filing it expects to issue 100 million new common shares with an estimated average value of $22.03 each.

The new stock will be traded on the New York Stock Exchange, it said.

The firm s existing stock, which had traded for as much as $18 a share in the year before the bankruptcy filing in March, 2006, has generally traded below $1 on the pink-sheet over-the-counter market. Friday it closed at 22 cents a share.

Dana has said its existing stock will be canceled and new stock will be issued when it emerges from bankruptcy.

The private equity firm Centerbridge Capital Partners LP and others have signed a so-called backstop agreement under which they agreed to buy any of the new preferred stock that creditors don t buy.

The reorganization plan is being funded with a $750 million investment from Centerbridge and creditors.

Dana revealed that the reason it rejected Appaloosa Management LP s alternative proposal on Oct. 12 was that unions had the right to terminate an accord over wage rates and benefits if Centerbridge were replaced by another financier.

Dana spokesman Chuck Hartlage wasn t available for comment.

The company has a hearing Tuesday in the bankruptcy court on approval of its amended disclosure statement. If the statement is approved, the plan might be considered for confirmation as early as Dec. 10, according to court papers.

When Dana filed for reorganization under Chapter 11, it listed assets of $7.9 billion and debt of $6.8 billion.

It has shifted its retiree health care into a separate fund, trimmed worker benefits, and made other cost-cutting moves.



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