Dana Corporation (fka DCNAQ)

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Credit Crunch Hits Firms in Chapter 11

http://money.cnn.com/news/newsfeeds/articles/apwire/9b7a13385716ca729a484fc5baa7b1cf.htm

Credit Crunch Hurts Companies Trying to Exit Chapter 11 Bankruptcy
December 28, 2007: 03:31 PM EST


NEW YORK (Associated Press) - Any company trying to tap credit markets recently knows the feeling: Lenders suddenly more demanding and exerting greater leverage in negotiating loan terms. That means borrowers may have to sweeten, postpone or cancel deals to avoid a prohibitive debt servicing burden.

Since the credit crunch began in earnest in June this scenario has mostly played out among highly leveraged junk-rated entities or private equity sponsors looking to pile debt atop companies to acquire them.

As 2007 draws to a close, however, the pinch has been felt by a new set of companies: those trying to exit Chapter 11 bankruptcy.

Three of the most significant bankruptcies in recent years have been Dura Automotive Systems Inc., Delphi Corp. and Calpine Corp. All three have been trying to reorganize to emerge from bankruptcy protection at a time of lower sales. All three now also face a hostile credit environment at a time when they need help to stand on their corporate feet.

Dura was the first to postpone its emergence from Chapter 11 because it couldn't obtain affordable financing for a $425 million senior secured bankruptcy exit loan.

Delphi recently cut its planned bankruptcy exit financing by $1.9 billion because it could not get credit. Calpine said it would cut its bankruptcy-exit financing package and take more time to emerge from Chapter 11...