Dana Corp gets $750 million capital infusion after court clears deal with unions

Mumbai: Bankrupt Dana Corporation got a $750 million private equity infusion after a US bankruptcy court granted approval of the settlement between the auto parts maker and each of the United Steel Workers (USW) and the United Auto Workers (UAW).

Judge Burton Lifland of the bankruptcy court in New York granted approval for the settlement agreements between Dana Corporation and the workers as the basis of an agreement with Centerbridge Capital Partners, LP, for a major investment in the company.

The agreement requires Dana to replace its healthcare and long-term disability obligations for retirees and union-represented employees with trusts. The auto parts maker would inject $700 million in cash and $80 million of its common stock and part of the Centerbridge investment would help to fund the trusts.

Centerbridge will make the capital infusion by buying $300 million of 4 per cent Series A convertible preferred stock and $200 million in 4 per cent Series B-1 convertible stock that isn''t acquired by any of the qualified creditors.

The judge also approved an agreement with the USW, the UAW, and Centerbridge, under which these parties will support a plan of reorganisation filed by Dana that includes both the labour settlements and the Centerbridge investment agreement.

>Dana slashed $100 million in labour costs as it pushed for the capital investment as being critical for winning plan.