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Brake Headquarters Announces $12M Debtor-In-Possession Credit

9 November 1999

Brake Headquarters Announces $12 Million Debtor-In-Possession Line of Credit for Its Sanyo Automotive Subsidiary in Chapter 11

    PERTH AMBOY, N.J.--November 8, 1999--Brake Headquarters USA, Inc. (OTC:BHQU) (the "Company" or "Brake") announced today that its two subsidiaries operating under Chapter 11 of the U.S. bankruptcy laws, Sanyo Automotive Parts, Ltd. and ABS Brakes, Inc. (collectively, "Sanyo") had closed on a $12 million working capital line of credit (the "Facility") with Foothill Capital Corporation ("Foothill"). The Company's WAWD subsidiary which accounts for approximately $30 million of the Company's revenues and is not affected by the bankruptcy filings nor is it a party to the facility. Following the closing of this arrangement the Company believes that this Facility provides management with ample working capital to return Sanyo to a normal level of business operations which existed prior to its May 1999 bankruptcy filing, to assist Sanyo in dealing with its creditors and to emerge from bankruptcy. The Facility is secured by all of Sanyo's assets, including inventory and accounts receivables, and is expected by the Company to enable Sanyo to purchase sufficient inventory and restore full service to its customers.
    As part of this transaction, National Bank of Canada and Bank Leumi USA were substantially repaid and replaced as senior lenders, although each bank has retained a portion of the debt and liens on Sanyo's assets on a subordinated basis and agreed to discontinue their litigation against the Company.
    Founded in 1976, Brake Headquarters USA, Inc. is a wholesaler and distributor of automotive brake system products and other component parts for domestic and foreign cars and light trucks.

This release contains certain forward-looking statements which involve known and unknown risks, uncertainties, and other factors not under the Company's control which may cause actual results, performance, and achievements of the Company to be materially different from the results, performance or expectations of the Company. These factors may include, but are not limited to, Sanyo's ability to emerge from bankruptcy and restore its operations to prior levels; intense competition; the Company's dependence on the automotive industry, which is cyclical; historical decreases in internal growth rates; and other risks detailed in the Company's periodic filings with the Securities and Exchange Commission.