Dana announces financial agreements

Dana Corporation has announced a series of interrelated agreements that will substantially reduce the company’s operating costs and provide important momentum toward its emergence from bankruptcy as a competitive, sustainable business. The agreements consist of:

– A settlement agreement with each of the United Steel Workers (USW) and
the United Auto Workers (UAW), which will lower Dana’s labor costs and
replace the company’s health care and long-term disability obligations
for retirees and employees represented by these unions with Voluntary
Employees’ Beneficiary Association (VEBA) trusts to which Dana will
contribute in aggregate approximately $700 million in cash (less certain
benefit payments made prior to the effective date of the company’s plan
of reorganization) and approximately $80 million in common stock of the
reorganized Dana;
– An agreement with Centerbridge Capital Partners, L.P., and its
affiliates on the terms under which the firm will invest up to $500
million in cash for convertible preferred stock in the reorganized Dana
and facilitate an additional investment by other investors of up to $250
million in convertible preferred stock; and
– A plan support agreement with the USW, the UAW, and Centerbridge, under
which these parties will support a plan of reorganization filed by Dana
that includes both the labor settlements and the Centerbridge investment

These agreements are subject to approval by the Bankruptcy Court for the Southern District of New York, where the company’s Chapter 11 bankruptcy proceeding is pending. The union settlement agreements are also subject to ratification by Dana’s USW and UAW employees, which the unions will seek in the near term.