SANTIAGO, Chile, April 1, 2021 /PRNewswire/ — Automotores Gildemeister Chile (“AG” or the “Company“) announced today that it will soon file a pre-packaged plan of reorganization in order to restructure its debt obligations under Chapter 11 of the United States Bankruptcy Code. The pre-packaged plan involves the Chilean, Uruguayan and Brazilian operations and does not include the Peruvian or Costa Rican operations.
Yesterday, the Company entered into a Restructuring Support Agreement (“RSA”) with holders of a substantial majority of the Company’s secured notes to support the pre-packaged reorganization plan. To this end, AG has called an extraordinary shareholders’ meeting for April 9. The Company expects to file for reorganization in the United States during the first half of April.
This process will strengthen AG’s balance sheet by reducing debt by over US$200 million, allowing it to maintain its current leadership position in the market and continue operating in the normal course with its customers, creditors, associates, partners, brands and the financial sector. The reorganization plan will not impair the claims of employees, customers and vendors, and the Company anticipates paying them in the ordinary course.
The Company has also received strong support from the major car manufacturers it represents, which AG has taken to undisputed leadership positions in both Chile and Peru.
In parallel with the anticipated Chapter 11 filing, AG will not make the scheduled interest payment due today under the existing bond indentures.
The measures being taken by AG are the result of a number of unforeseeable factors, including the sustained increase in the exchange rate in recent years, the effects of the social upheaval in October 2019 and subsequently the devastating effects of Covid 19. These phenomena have had far-reaching effects, making it impossible for AG to meet certain international financial obligations absent restructuring.
Because the process is supported by key creditor constituencies, the pre-packaged plan will allow AG and its subsidiaries to emerge from this process with a sound and strengthened balance sheet, maintain their current leadership position and guarantee the continuity and normal operation of the Company in the eyes of customers, creditors, employees, partners, car manufacturers and the financial sector.
SOURCE Automotores Gildemeister SpA