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American Tire Distributors, Inc. has entered into a tentative agreement with the holders of the majority of its term loans to support the previously announced restructuring support agreement, which would reduce the Company’s debt by approximately $ 1.1 billion and increase its financial flexibility as it continues its ongoing transformation.
The deal translates into support from all three categories of the company’s creditors, ATD said in a statement.
“We are delighted to have the support of our term lenders for our previously announced Restructuring Support Agreement, which will help facilitate a fully consensual process overseen by the courts,” said Stuart Schuette, CEO of ATD. “The strong support of our main financial players for our recapitalization plan represents an important vote of confidence in our company and our future. We intend to move quickly into 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, term loan lenders will, among other things:
- Provide half of the $ 250 million in new funding to support ATD’s ongoing activities.
- Extend the term of the term loan facility by three years.
- Participate in exit funding once the process overseen by ATD is completed.
The Company also announced that it has received court approval for all of its Day 1 petitions that will support the business. The approved motions give the company the power to, among other things, secure post-petition financing, continue to use its cash management system, and continue to pay critical vendors and vendors in full under pre-existing business terms. The company intends to meet its normal course obligations and expects its operations to continue uninterrupted throughout the court-supervised process, ATD said in the statement.
“The Court’s approvals of our day one applications are an important step forward that will allow the company to continue to meet its obligations and provide our customers with the unparalleled selection and service they expect from us,” Schuette said. “This positive dynamic would not be possible without the commitment of our associates. On behalf of our management team, we thank them for their hard work and constant dedication to enabling ATD to support our customers across all channels, as well as the consumers they serve.
On October 4, ATD concluded a definitive agreement with around 75% of its bondholders under a recapitalization that would reduce the company’s debt by approximately $ 1.1 billion. To implement the final agreement, the company voluntarily filed for a Chapter 11 reorganization in the District of Delaware. ATD’s operations through its distribution network continue to serve customers without interruption throughout this process.