Marelli Seeks Restructuring with $1.1 Billion Financing
Marelli Corp, a major supplier to Nissan, filed for Chapter 11 bankruptcy protection in the United States on Wednesday. The move follows months of uncertainty regarding its talks with creditors. The auto parts maker, which specializes in car interiors and lighting, is owned by private equity firm KKR. Marelli has secured $1.1 billion in financing from its lenders, with around 80% of them signing an agreement to support the restructuring effort.
Impact on Operations and Debt Relief
The company emphasized that it does not expect any operational impact from the Chapter 11 process, which is aimed at restructuring its financial position. As part of the bankruptcy process, Marelli’s secured debt of approximately $4.9 billion will be eliminated. This move allows the company to move forward with its restructuring plan and seek a new ownership structure post-bankruptcy.
Global Trade War and Financial Struggles
The bankruptcy filing comes after Marelli’s liquidity was affected by the global trade war, particularly the tariffs imposed on the automotive industry, as the company’s business is import and export-focused. The trade tensions created significant challenges for Marelli, impacting its financial position and ability to navigate its obligations.
Restructuring and Future Ownership
Under the terms of the bankruptcy, the lenders who provided the $1.1 billion financing will take ownership of the business once the Chapter 11 process is complete. However, the company is subject to a 45-day “overbid process,” where other parties may bid for the business. The company’s assets and liabilities are valued in the range of $1 billion to $10 billion, according to court filings.
Japanese Lenders and Nissan’s Support
The bankruptcy filing also resolves an impasse between two opposing bank groups — Japanese lenders and the Ad Hoc Group of Senior Lenders. Mizuho Financial Group, Japan’s third-largest bank, extended ¥237.6 billion ($1.64 billion) in lending to Marelli and has already accounted for the financial impact, expecting minimal disruption to its earnings. Nissan, which is a key customer of Marelli, expressed support for the supplier, stating that it would coordinate efforts to prevent supply chain disruptions during the restructuring.
Marelli’s Formation and Previous Efforts
Marelli was formed in 2019 following the merger of Magneti Marelli and Japan’s Calsonic Kansei. Previously, Fiat Chrysler (FCA), now part of Stellantis, sold Magneti Marelli to Calsonic Kansei for €5.8 billion ($6.66 billion). Marelli’s restructuring plan also included a buyout proposal from India’s Motherson Group, but this plan could not bridge the gap between Japanese and foreign creditors, according to reports.
