American Suzuki gets $100M in financing to go out of business... buy more cars?
Fri, 07 Dec 2012
Out of the newly approved funds, $50 million can be used for operations, and oddly, the other $50 million can be put toward purchases of new inventory from SMC. That's right, even as existing inventory was headed for a smooth exit with the help of incentives, customer demand for orphan Suzuki models is so strong – last month's sales were up 22 percent compared to 2011 – that ASMC plans to purchase 2,500 additional cars from SMC that were built after the bankruptcy announcement. Good news for the owners of those vehicles: the top 50 dealers, representing more than 98 percent of ASMC sales, will become parts and services centers.
The press release below has more information. Unlike its recent tenure here, the end of Suzuki cars in the US looks like it's going rather well.
AMERICAN SUZUKI MOTOR CORPORATION ("ASMC") RECEIVES BANKRUPTCY COURT APPROVAL OF UP TO $100 MILLION IN DEBTOR-IN-POSSESSION ("DIP") FINANCING
ASMC continues realignment to focus on Motorcycles/ATV and Marine divisions
Company intends to bring additional automobile inventory from Japan to dealers in the continental U.S. to meet current consumer demand
BREA, Calif., Dec. 6, 2012 – American Suzuki Motor Corporation ("ASMC" or "the Company") today announced that it has received Court approval for Debtor-In-Possession ("DIP") financing. As a result, the Company will be able to borrow up to $50 million for operations and up to $50 million for purchases of inventory from Suzuki Motor Corporation ("SMC"). These funds will help ensure that ASMC has the cash necessary to operate its business during the pendency of the chapter 11 case. The motion was previously granted Court approval, on an interim basis, on November 7, 2012.
In response to continued consumer demand, dealer interest has remained high in continuing to order and receive shipments of Suzuki automobiles as long as they remain available, ASMC intends to use a portion of the DIP funds to purchase and ship 2,500 additional cars from Japan to the continental U.S., which have been manufactured since ASMC announced its restructuring. Earlier this week, the Company released its November 2012 sales numbers, reporting that it sold more than 2200 units last month, an increase of 22% compared to the same period last year.
As previously announced, ASMC is continuing to market and sell its remaining U.S. automobile inventory through its national network of automotive dealers. Further, ASMC continues to provide marketing and incentives to help promote the continued sale of the automobiles remaining in dealer inventory and the pipeline. This includes, zero percent financing for up to 72 months for qualified customers through an agreement with Ally Financial Inc. All automobile warranties will continue to be fully honored in accordance with their terms, and parts and service will continue to be provided to consumers through ASMC's parts and service dealer network. As of November 30 2012, automotive dealers representing all of the top 50 and more than 98% of the total volume of ASMC's continental U.S. automobile sales have agreed to transition to parts and services operations.
ASMC announced on November 5, 2012, that it plans to realign its business to focus on the long-term growth of its Motorcycles/ATV and Marine divisions and to wind down and discontinue new automobile sales in the continental U.S., following a thorough review of its current position and future opportunities in the U.S. automotive market. ASMC determined that the best path to achieve this realignment in an efficient and orderly manner was to restructure its operations under chapter 11. The case was filed in the United States Bankruptcy Court, Central District of California in Santa Ana.
Additional information regarding ASMC's business realignment can be found at the Company's website, www.suzuki.com or via an information hotline at 1-877-465-4819.
By Jonathon Ramsey
See also: Incentives aid smooth Suzuki wind down, Suzuki Samurai lives on with new Jimny facelift, Suzuki has to take out $45M loan just to shutter US dealers.