Press Release for Arrow Automotive Industries, Inc.
19 October 1998
Press Release for Arrow Automotive Industries, Inc.
CONWAY, Ark.--Oct. 16, 1998--Arrow Automotive Industries, Inc. (ASC:AI) announced today that it had filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code. The petition was filed at 11:40 a.m. eastern standard time in the United States Bankruptcy Court for the District of Massachusetts, Western Division.
Under Chapter 11, Arrow intends to continue to operate under court protection from creditors while seeking to work out a plan of reorganization. Arrow's existing lenders have agreed, subject to bankruptcy court approval, to provide funding to continue operations.
Arrow stated that negotiations are continuing with Motorcar Parts and Accessories, Inc., Torrance, California for the purchase of Arrow's electrical parts division and its clutch and crankshaft remanufacturing divisions, which Arrow estimates produced approximately 70% of its net sales in fiscal 1998. Arrow expects that it may receive competing bids from other prospective purchasers following its Chapter 11 filing. Arrow noted, however, that there can be no assurance that such negotiations and/or bidding process will be successful or that, if successful, the resulting transaction will form the basis of a Plan of Reorganization satisfactory to Arrow's creditors. It is anticipated that, concurrently with the sale of its electrical parts, clutch and crankshaft remanufacturing divisions, Arrow will pursue the sale or other divestiture of its remaining business assets, including the various other mechanical product lines, the inventory and equipment relating to those product lines, and its real estate.
"Arrow's decision to seek protection under Chapter 11 of the Bankruptcy Code is necessary to permit a restructuring directed toward preserving our electrical parts, clutch and crankshaft remanufacturing businesses," said Jim L. Osment, Arrow's President and Chief Executive Officer.
"We are grateful for the loyal support of our customers, and intend to make every effort to ensure that our service to our electrical, clutch and crankshaft customers continues without disruption. We also appreciate the patience and support of our suppliers, and hope, with their continued support, to devise a plan for their repayment under Chapter 11 as soon as possible," said Mr. Osment.
Arrow said that its filing was a result of losses incurred during its 1998 fiscal year and the first quarter of its current fiscal year, as well as pressure imposed by its principal lenders. For the nine months ended March 28, 1998, Arrow reported a net loss of $3,448,000 on net sales of $64,056,000. Arrow estimates additional losses of over $2,800,000 for the fourth quarter of fiscal 1998, and expects that the first quarter of 1999 will show a loss as well.
Arrow remanufactures a variety of replacement parts for domestic and imported vehicles for distribution throughout the United States and Canada.