Allied Holdings, Inc. Obtains Interim Order to Amend its Senior Secured Debtor-In-Possession Credit Agreement
DECATUR, Ga., June 30 -- Allied Holdings, Inc. (OTC Pink Sheets: AHIZQ) announced that it has obtained an interim order to enter into the fifth amendment to its Senior Secured, Super Priority, Debtor- in-Possession credit facility with its lenders. The amendment provides the Company with $30 million of additional availability through a new Term Loan C, with the proceeds of the Term Loan C to be used by the Company to repay any protective over-advances obtained under the existing facility, reduce the principal amount of the Company's revolving credit advances under the facility, and for capital expenditures and other working capital requirements.
The interest rate on the new $30 million Term Loan C will be LIBOR plus 9.5%, payable at the option of the Company in cash each month or in kind, with interest compounded on a monthly basis and due in full on June 30, 2007. The amendment also provides the Company with additional availability by allowing the Company to pay interest in kind on its existing $80 million Term Loan B, rather than pay such interest monthly in cash, and reduces the interest rate on Term Loan B to LIBOR plus 8.5%. The amendment extends the maturity date of Term Loan B and the existing $20 million Term Loan A from February 7, 2007 to June 30, 2007. The maturity date of the existing $130 million revolving credit facility remains February 7, 2007. The amendment also revises the existing financial covenants set forth in the facility and waives all defaults under the facility, which defaults have been previously disclosed by the Company.
As a result of the amendment, the Company is not required to maintain the previously announced 10% wage reduction applicable to its U.S. employees represented by the Teamsters under Section 1113(e) of the Bankruptcy Code in order to borrow under the facility. As a result, effective July 1, 2006, the Company will stop reducing by 10% the wages earned by its U.S. employees represented by the Teamsters. As required by the collective bargaining agreement, the Company will also implement a wage increase of approximately 2.5%, as well as a cost of living adjustment.
The Company believes that obtaining this additional availability should provide the Company with the cash required to meet working capital needs and invest in its fleet while it continues to seek a long-term modification to the collective bargaining agreement with its employees in the U.S. represented by the Teamsters. The Company intends to continue its negotiations with representatives of the Teamsters in a collaborative manner in an effort to modify the current collective bargaining agreement as it attempts to complete its reorganization and emerge from bankruptcy.
The bankruptcy court has set a hearing for July 12, 2006 in regard to the final order on the amendment to the credit facility.
About Allied Holdings
Allied Holdings, Inc. is the parent company of several subsidiaries engaged in providing distribution and transportation services of new and used vehicles to the automotive industry. The services of Allied's subsidiaries span the finished vehicle continuum, and include car-hauling, intramodal transport, inspection, accessorization and dealer prep. Allied, through its subsidiaries, is the leading company in North America specializing in the delivery of new and used vehicles.
Statements in this press release that are not strictly historical are "forward-looking" statements. Such statements include, without limitations, any statements containing the words "believe," "anticipate," "estimate," "expect," "intend," "plan," "seek," and similar expressions. These forward- looking statements involve a number of risks and uncertainties including risks and uncertainties relating to the following: the impact of the Chapter 11 proceedings and the related circumstances which could materially affect the amounts of assets and liabilities included in the consolidated financial statements or the Company's market share; risks associated with Allied's ability to obtain approval of and/or to implement its plan of reorganization; receipt of final approval for the Fifth Amendment to the Debtor-in-Possession Credit Facility; risks associated with Allied's ability to obtain exit financing to replace the Debtor-In-Possession Credit Facility; sufficient cash availability for the Company to meet its working capital need; the ability to comply with the terms of our current debt agreements and customer contracts; Allied's ability to negotiate a new collective bargaining agreement with its employees in the U.S. represented by the Teamsters; economic recessions or downturns in new vehicle production or sales; war in the Middle East; increases in the cost and availability of fuel; the highly competitive nature of the automotive distribution industry; dependence on the automotive industry and ongoing initiatives of customers to reduce costs; loss or reduction of revenues generated by the Company's major customers or the loss of any such customers; the variability of OEM production and seasonality of the automotive distribution industry; Allied's highly leveraged financial position; Allied's ability to obtain financing in the future; Allied's ability to fund future capital requirements; increased costs, capital expenditure requirements and other consequences of the Company's aging fleet of Rigs as well as Rig purchasing cycles; labor disputes involving Allied or its significant customers; dependence on key personnel; increased frequency and severity of employee related accidents and workers' compensation claims; availability of appropriate insurance coverages in all categories; changes in the regulatory requirements which are applicable to Allied's business; changes in vehicle sizes, configurations and weights which may adversely impact vehicle deliveries per load; risks associated with doing business in foreign countries; the availability of qualified drivers; dependence on legacy information systems; dependence on IBM for mainframe and system support; increased frequency and severity of cargo claims; increased frequency and severity of traffic accidents; excess manufacturer production capacity which could lead OEMs to close manufacturing facilities; and efforts to improve network efficiency.
Many of these factors could cause Allied's actual results to differ materially from those suggested by the forward-looking statements and are beyond the Company's ability to control or predict. Allied cautions readers not to place undue reliance on the forward-looking statements and Allied also disclaims any obligation to update or review forward-looking statements, except as may be required by law.
NOTE: For additional information about Allied, please visit our website at www.alliedholdings.com.