F , GM ,,, Collins & Aikman CEO Stockman Resigns Thursday May 12, 5:54 pm ET By Adrienne Schwisow, Associated Press Writer Collins & Aikman CEO Resigns; Company Seeks Creditor Waivers in Face of Liquidity Issues
DETROIT (AP) -- The chairman and chief executive of car interior parts maker Collins & Aikman Corp. resigned and the company said Thursday it's seeking a waiver from creditors because of lower-than-expected first-quarter results and "liquidity issues." Standard & Poor's Ratings Services reduced the company's "junk" credit rating even further, and the New York Stock Exchange suspended trading of the company's stock. ADVERTISEMENT
David A. Stockman, 58, a former budget director in the Reagan administration, also stepped down as a member of the board of the Troy-based company. He had been a director since 2001 and chairman since 2002.
Company spokesman David Youngman would not say why Stockman quit but said the departure had not been previously announced and that as of Thursday Stockman no longer has any affiliation with the company.
In announcing the resignation, the company also cautioned that previous estimates for the first-quarter of 2005 were unreliable.
S&P said it was further lowering Collins & Aikman's corporate credit rating from CCC+ to CCC- and cited a negative outlook for the supplier.
"The downgrade reflects our belief that this supplier of automotive interior products could be forced to seek bankruptcy protection in the near term because of severe liquidity pressures," said S&P credit analyst Martin King.
S&P said Collins & Aikman's total debt is about $2 billion.
The company employs about 23,000 people at sites in 17 countries.
A former Republican congressman, Stockman was White House budget director during Ronald Reagan's first term and led the charge for the supply-side economic policy of using tax breaks to spur growth that came to be known as "Reaganomics." He left office a vocal critic of the policy.
Before joining Collins & Aikman, he was senior managing director at investment group Heartland Industrial Partners, then Collins & Aikman's largest shareholder.
Collins & Aikman, whose products include automotive fabric and convertible car tops, said former director Charles E. Becker will step in as acting chief executive while it searches for a replacement for Stockman. Board member Marshall Cohen was appointed non-executive interim chairman.
The company said weak results for the first quarter left it in violation of certain creditor agreements and that it's seeking waivers or changes to the covenants.
The company said it already has received a waiver and amendment of its receivables facility to address "immediate liquidity issues" arising from the recent downgrade of debt held by customers Ford Motor Co. and General Motors Corp. to junk status.
Shares of Collins & Aikman last traded Wednesday, when they closed at 78 cents on the New York Stock Exchange. The shares were worth about $6 last summer but have sunk since the company announced accounting problems and said it likely would have to restate earnings for 2003 and 2004, reducing results for both periods.
The NYSE said Thursday it decided to delist Collins & Aikman's common shares given the company's financial uncertainty.
As of Wednesday, Collins & Aikman had cash and availability under its financing arrangements of approximately $13.4 million. The company's near-term cash requirements, excluding ongoing operations, include capital expenditures and interest payments on debt securities of about $26.9 million on June 30 and $26.7 million on Aug. 15.
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