Source: Company Press Release
 
Sheboygan, Wisconsin – J.L. French Automotive Castings, Inc. (“J.L. French”), a privately-held, leading global supplier of high pressure die-cast aluminum automotive components and assemblies, announced today that it reached agreement with the majority of its second lien debtholders on a balance sheet restructuring that will bring up to $130 million in new equity investment into the company.
 
The agreement, which includes the repayment in full of approximately $295 million in first lien debt and the conversion of $170 million in second lien debt into equity and warrants, will allow J.L. French to reduce debt levels by approximately $300 million, as well as remove $200 million in preferred securities from its balance sheet. In so doing, J.L. French will be positioned to increase investment in its core business and to expand its already strong competitive position.
 
The company and a number of its domestic affiliates will effectuate this restructuring pursuant to a plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court for the District of Delaware.   J.L. French and a number of its domestic subsidiaries today filed voluntary petitions to commence this Chapter 11 restructuring. The Chapter 11 cases do not include J.L. French’s foreign affiliates. 
 
The company plans to continue business as usual at its facilities in Sheboygan, Wisc.; Glasgow, Ken.; and Etxebarria, Vizcaya, Spain. The Spanish operations, which employ 340 personnel, serve customers in Europe and are not included in the U.S. bankruptcy filing.  The company’s new relationship in China, announced in September 2005, is also unaffected by today’s filing.
 
Prior to commencing the Chapter 11 case, the company reached agreement with its second lien lenders in sufficient numbers to confirm a Chapter 11 plan of reorganization.  Additionally, J.L. French received backstop commitments from many of those same creditors to fund the entire $130 million new equity investment.  As a result, the company believes it can complete its Chapter 11 reorganization on an expedited basis late in the second quarter of 2006.
The company has also obtained a commitment of up to $50 million in debtor-in-possession (DIP) financing from General Electric Capital Corporation to which the company’s senior secured lenders have consented.  Once approved, the company will use the DIP financing facility to fund its working capital needs during the Chapter 11 case. The company also intends to pay employees, trade vendors, suppliers and service providers of its U.S. operations in the ordinary course of business, and will seek Court authority to do so.
 
“We are pleased to have reached agreement with the majority of our creditors to bring the  company’s debt level in line with cash flows and create a strong financial foundation for our future business,” said Jack F. Falcon, chairman, CEO and president, who joined the company in mid-2003.  “The demonstrable support of our creditors affirms that J.L. French will continue to play a leading role in high-pressure die-casting in the automotive industry.  Our recovery will be rapid and successful.  In fact, we have already obtained commitments for new business from our major customers.” 
 
Mr. Falcon continued that “the new DIP financing, upon approval by the Court, should be sufficient for our needs and will ensure that J.L. French has the resources to continue operations without interruption. We are in contact with customers and suppliers to ensure they are clear with regards to our restructuring process future plans.  Our restructuring is designed to allow the Company to continue business as usual and the vast majority of our suppliers and customers should see no disruption.  In the few exceptions where this is not the case we are committed to collaboratively resolving any issues.”
 
The company has filed a number of other “first-day” motions asking the Court to approve, among other things, payment of prepetition employee wages and benefits and continuation of customer programs and existing cash management systems.  The Court is expected to hear these motions promptly.  The relief requested in these motions will help ensure that the company’s business operations continue without interruption.
 
The company today announced plans to close its underperforming operations in Benton Harbor, Mich. and Saltillo, Mexico. J.L. French’s operations in the United Kingdom will file under Administration there.  The joint administrators, working with the company, will determine the future of the Witham, England and Presteigne, Wales locations, which together are structured as one legal entity.  Management in each location is working closely with local agencies to ensure a smooth transition, which is expected to take several months to meet the needs of existing customers. Those operations collectively employ approximately 700 people.
 
As of Dec. 31, 2005, J.L. French had approximately $465 million in first and second lien senior secured debt and $28.9 million in 11.5% senior subordinated unsecured notes due 2009.  The company incurred the majority of this debt as a result of an expansion and acquisition program in the late 1990s. The company’s 2005 revenues were approximately $500 million, most of which the company generated in its continuing operations in Wisconsin and Kentucky in the U.S. and in Spain.
 
J.L. French is being advised by its investment banker, Miller Buckfire & Co., LLC, its financial advisor, Conway MacKenzie & Dunleavy, and its bankruptcy counsel, Kirkland & Ellis. The second lien lenders are being advised by Houlihan Lokey Howard & Zukin and Latham & Watkins. 
 
Founded in 1968, J.L. French Automotive Castings, Inc., based in Sheboygan, Wisconsin, is a leading global designer and manufacturer of highly engineered aluminum die cast automotive parts including oil pans, engine front covers, engine blocks and transmission cases.  The company employs more than 1800 people in its ongoing operations worldwide.
 
Additional information about the company’s reorganization may be found online in the news section of www.jlfrench.com or www.bmcgroup.com/jlfrench.