Decatur, GA-based car hauler Allied Holdings has filed for chapter 11 bankruptcy protection as it continues to try and dig itself out of financial hard times.
Allied said it plans to continue normal operations -- largely due to $230 million worth of debtor-in-possession financing from GE Commercial Finance, Morgan Stanley Senior Funding, Inc. and Marathon Asset Management. Allied lost $7.5 million on revenues of $898.1 million in 2002 after losing $39.5 million on revenues of $896.7 million in 2001. In 2004 the company lost $53.9 million and in the first quarter of 2005 it posted a loss of $10.1 million.
Hugh Sawyer, Allied’s president & CEO said that, subject to court approval, those funds would be available to help satisfy obligations, including the payment of wages and benefits to active employees and retirees.
“Positive developments have been significantly offset by automotive industry dynamics that continue to hamper our financial performance, including a sharp decline in new vehicle production, rising fuel costs, and increasing wage and benefit obligations under the Allied Automotive Group’s master agreement with its Teamster-represented employees,” said Sawyer. “Reorganization under chapter 11 should provide us with an opportunity to address these financial challenges.”
Although Fred Zuckerman, director of the International Brotherhood of Teamsters carhaul division, said in a statement that the labor group wasn’t surprised by Allied’s bankruptcy filing – citing years of fiscal losses – he was none too happy with the tone Allied took in referring to the negative impact of wage and benefit “obligations” to more than 5,000 Teamster-represented employees.
“Teamster members had approved a two-year wage freeze from 2003 to 2005 and had taken other steps to help the company succeed, but apparently the Allied management was unable to take advantage of our members’ sacrifices to make their business plan work,” he said. “We have worked closer with this company than any other company in recent years to make them successful. However, we have made it clear that their financial problems will not be solved on the backs of our hardworking Teamster members.”
