The Bridge Facility has a 364-day term and is intended to provide access to additional liquidity should the company need it and can be terminated at the company's option at any time
Dana Incorporated (NYSE: DAN) announced today that it continues to achieve significant operation cost reductions and working capital improvements. In response to ongoing lower customer demand, the company has taken additional cost actions such as the aggressive elimination of discretionary spending and intense flexing of conversion costs across its global manufacturing facilities, including its dedicated aftermarket locations. These cost actions are in addition to compensation reductions that were enacted in April for all salaried associates and its board of directors from 20 percent up to a 50 percent reduction in the chief executive officer’s compensation.
“These additional cost-flexing actions are aiding us in aligning our cost structure with the reduced production volumes across the mobility markets,” said James Kamsickas, chairman and CEO of Dana. “We continue to prioritize the safety of our employees and service to our customers, and we have the operational flexibility needed to be responsive during this difficult situation.”
The company also announced today that it has entered into a new credit facility (“Bridge Facility”) and amended its existing senior credit facility (“Senior Credit Facility”), which includes its existing revolving credit facility and term loan facilities. The Bridge Facility has a 364-day term and is intended to provide access to additional liquidity should the company need it and can be terminated at the company’s option at any time. The amended Senior Credit Facility includes a temporary progressive alleviation of its sole financial maintenance covenant. The first lien net leverage ratio covenant will increase quarterly to a maximum of 4x at the end of 2020 and then decrease quarterly until it returns to 2x at the end of the third quarter of 2022. The Bridge Facility is in addition to the company’s Senior Credit Facility, which includes a $1 billion revolving credit facility under which the company has drawn $300 million as of March 31.
The company also announced that it will temporarily suspend its common stock dividend.
Jonathan Collins, executive vice president and CFO of Dana, stated, “We have taken these actions out of an abundance of caution to guarantee our access to liquidity. The strength of our balance sheet and capital structure offers us flexibility and security as we navigate through these challenging times.”
The company had approximately $650 million in cash and marketable securities as of March 31, and currently has $679 million available on its committed revolving credit facility, as well as $500 million on its new Bridge Facility for total liquidity of more than $1.8 billion. The company notes that it has no meaningful debt maturities before 2024.
Dana will provide an update on market conditions on its first-quarter earnings call.
Citibank, Barclays, BMO Capital Markets, BofA Securities, Credit Suisse, Goldman Sachs, JP Morgan Chase, and RBC Capital Markets acted as joint lead arrangers and joint book-runners.
Source: Company Press Release