WASHINGTON (Dow Jones/AP) — Plastech Engineered Products Inc., a key parts supplier to Chrysler LLC, has obtained a $38 million credit line aimed at keeping the company afloat at least until next week.
The loan, provided by a group of lenders to whom Plastech already owes $111 million, matures on Feb. 11, according to court documents. It is mainly aimed at protecting the lenders' collateral, although some of the loan proceeds will be used as working capital.
Plastech has asked the U.S. Bankruptcy Court in Detroit for permission to tap the loan, which the company's pre-bankruptcy lenders are providing. That group includes Bank of America Corp. and Wachovia Corp.
Plastech said in court papers filed Tuesday that it will have to shut down its business if it can't immediately tap the loan. It has also asked the court for permission to spend lenders' cash collateral.
Plastech said in court papers it couldn't find other lenders willing to provide funds on better terms.
If a judge approves the $38 million loan, Plastech's financing could be extended past Feb. 11 without the need for further court approval, according to court papers. Plastech would need only
to get its lenders to agree to an extension.
Plastech, based in Dearborn, Mich., filed for bankruptcy protection on Friday after Chrysler terminated its supply contracts with the company. Rising raw-material costs and declining production by U.S. auto makers, two persistent challenges for auto-parts companies, were also squeezing Plastech.
Chrysler on Monday idled four assembly plants, but then reached an interim agreement with Plastech on Tuesday that restored the shipment of Plastech parts to Chrysler and allowed the plants to resume production.
Plastech, which operates 36 manufacturing plants, makes interior trim, bumper components, and cockpit modules. Its other customers include Johnson Controls Inc., Ford Motor Co. and General Motors Corp.
Besides Wachovia and Bank of America, the other lenders providing the $38 million bankruptcy loan are Comerica Inc., Wells Fargo & Co., General Electric Capital Corp., PNC Financial Services Group Inc., and Fifth Third Bancorp.
