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ATD Files Chapter 11; Plan In Place To Reduce Debt By $1.10 Billion

Huntersville, NC-based American Tire Distributors (ATD), one of the largest independent suppliers of tires to the replacement tire market, has voluntarily filed for Chapter-11 reorganization. ATD also has entered into a definitive agreement with roughly 75 percent of its bondholders on the terms of a recapitalization that management says would reduce the company’s debt by approximately $1.10 billion, as well as increase its financial flexibility as it continues its ongoing transformation.

According to ATD, terms of the deal are substantially similar to those contemplated by an agreement in principle the company announced back in September.

The agreement, which is subject to court approval, calls for …
• Bondholders to receive 95 percent of new equity in a recapitalized ATD;
• Existing equity holders to receive 5 percent of the new equity; and
• The company to pay continuing manufacturer partners and vendors in full for existing claims.

Operations across ATD’s distribution network are reportedly continuing without disruption. Additionally, the company’s National Tire Distributors (NTD) subsidiary and its other Canadian subsidiaries are not part of the aforementioned court-supervised process, and continue to serve customers as they always have, according to ATD.

In connection with the court-supervised process, ATD says it has received commitments that would provide continued access to the company’s revolving credit facility, plus $250 million in new financing, which, subject to court approval, would be available to support ATD’s ongoing operations.

The company reportedly has the support of all three categories of ATD’s debt holders, and management expects the company to move quickly through this court-supervised process.

Additional information is available on ATD’s restructuring website, ATDrecapitalization.comKirkland & Ellis LLP is legal counsel to ATD. AlixPartners LLP is the company’s operational advisor, and Moelis & Co. is its financial advisor.

ATD operates more than 140 distribution centers, including 25 DCs in Canada, serving roughly 80,000 customers. The company employs approximately 5,000 people across its DC network, about 800 of which are in Canada.

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