August 28, 2010

Cooper Standard Exits Bankruptcy with Profit

Auto supplier Cooper-Standard has exited bankruptcy in style – by making a profit. Cooper-Standard, the company that was set up as an offshoot of Cooper Tire and Rubber, emerged from bankruptcy last month with a healthy first quarter profit of $3.4 million. Now that it has exited Chapter 11 bankruptcy, it is now on the lookout for acquisitions and intends to hire workers. Its CEO, Jim McElya described the whole exercise as a ‘very successful restructuring’.

Cooper-Standard’s exit from bankruptcy coincided with an upturn in auto production this year and this helped its transition from bankruptcy tremendously. Cooper-Standard is biggest maker of auto body-sealing systems in the world. They produce items like the seals between the doors and windows to make them watertight and keep out the dust. The company also makes tubes for the transmission of fuel, coolant and other fluids through a vehicle as well as parts for reducing vibration and noise.

In addition, another factor that aided its emergence from bankruptcy was its cost cutting measures to withstand the economic recession. Shortly after its Chapter 11 bankruptcy filing in August 2009, Cooper-Standard had already started to restore pay that had been cut and the company’s 401(k) match.

When it filed for Chapter 11 bankruptcy, Cooper-Standard was laden with $1.1 billion in debts, largely due to its formation in 2004 from its tire making parent company and its ownership change to the Cypress Group and Goldman Sachs. As the auto industry ground to a standstill in late 2008 and 2009, Cooper-Standard became one of many auto companies to file for bankruptcy as suppliers across the board struggled to stay current with their loan obligations.

When it entered into Chapter 11, the company managed to reduce its debts by almost 60% to $480 million. It also paid off most of its creditors in full.

McElya points out that the company intends to focus on expanding its business in Asia and putting more of its products on vehicles. The company’s goal is to increase its product per vehicle from about $100 to $500. At this point, the majority of Cooper-Standard’s business is made in North America and Europe with only 7% coming from Asia. The company aims to increase that figure to 25% to 30% as Cooper-Standard eyes new investment and potential acquisitions. Cooper-Standard employs about 16,000 workers worldwide, with 900 in Michigan.

In particular, Cooper-Standard wants to shift its focus to smaller vehicles that still provide luxury as auto manufacturers producing such units would not want to scrimp on body seals and engine mounts that reduce noise.

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Filed under Chapter 7 (Tampa) by dmishesq on Aug 28th, 2010.

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Cooper Standard Exits Bankruptcy with Profit

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