Court OKs ATD reorganization; firm expects to emerge from bankruptcy by year-end

HUNTERSVILLE, N.C.— American Tire Distributors Inc. (ATD) is expected to emerge successfully from Chapter 11 bankruptcy protection by year-end after the U.S. Bankruptcy Court for the District of Delaware approved its reorganization plan during a hearing Wednesday morning.

This news comes on the heels of Monday's announcement that ATD's voting stakeholders — including 100 percent of voting term lenders and voting shareholders and 98 percent of voting bondholders — "overwhelmingly" had approved its reorganization plan in its efforts to emerge from bankruptcy protection.

The reorganization plan is designed to reduce ATD's debt and increase its financial flexibility. ATD filed for Chapter 11 bankruptcy protection on Oct. 4.

"We were able to reach this key milestone on an accelerated basis thanks to the confidence and support of our financial stakeholders, manufacturer partners and customers," ATD CEO Stuart Schuette said.

"Through this recapitalization process, we are creating a stronger ATD, with less debt and greater financial flexibility to build on our 80-year history of leadership and innovation."

Once it emerges from bankruptcy, ATD said it will reduce its debt by more than $1.1 billion and will receive new financing to support its renewed financial flexibility.

"Importantly, we continued to deliver strong operating results throughout this process," Mr. Schuette said.

"Our performance reflects the deep value proposition that ATD continues to offer our customers and our manufacturer partners. We look forward to completing this process and remain laser-focused on providing our customers with the unparalleled selection and service they expect from ATD."

Under the terms of the agreement, the term-loan lenders agreed to, among other things:

• Provide half of the $250 million in new financing to support ATD's continuing operations;
• Extend the maturity of the term loan facility by three years; and
• Participate in exit financing upon ATD's completion of the court-supervised process. .

As part of the agreement, bondholders will receive 95 percent of new equity in the recapitalized company, and existing equity holders will receive 5 percent of the new equity.