ATD Enters Agreement to Transition Ownership; Commenced Chapter 11 Proceedings

American Tire Distributors, Inc. (“ATD” or the “Company”) today announced that it is implementing specific steps to maximize value and strengthen the Company’s financial foundation as it continues supporting manufacturer partners and customers across its nationwide distribution network.

The Company has entered into a restructuring support agreement (the “RSA”) with certain lenders, including Guggenheim Partners, LLC, Monarch Alternative Capital LP, Sculptor Capital Management, Inc., and Silver Point Capital, L.P., representing approximately 90% of the outstanding obligations under the Company’s Term Loan (collectively, the “Ad Hoc Lender Group”) that contemplates transitioning ownership of the Company through a competitive sale process. The Company and Ad Hoc Lender Group are in discussions with respect to an asset purchase agreement that, if implemented, would transition ownership of the Company to the Ad Hoc Lender Group, which manages more than $500 billion. The contemplated transaction would also eliminate a significant amount of debt and provide access to new capital, positioning the business as a stronger partner to manufacturers and customers who rely on ATD to improve their productivity, profitability, and performance.

To implement the terms of the RSA and conduct a value-maximizing sale process, the Company and certain of its subsidiaries commenced voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware (the “Court”). During this process, ATD will continue to operate across its nationwide distribution network as the organization remains focused on supporting its manufacturer partners and providing its customers with tires, wheels, related tools, and accessories to support their business.

“For nearly 90 years, ATD has continuously evolved to meet the dynamic shifts and challenges facing the auto aftermarket. Today, we are taking further steps to position ATD for our next phase as a stronger distribution partner to our manufacturers and customers as we return to our roots and hone our core value proposition as a wholesale distributor,” said Michael Feder, Interim Chief Executive Officer of ATD and Partner & Managing Director (retired, on recall) at AP Services, LLC, an affiliate of AlixPartners, LLP (“AlixPartners”). “We are confident that entering into this process with the support of the Ad Hoc Lender Group will enable ATD to execute its business strategy and achieve our long-term objectives.”

Mr. Feder continued, “Since being named interim CEO, I have seen how impactful our business is to the manufacturer partners, customers, associates, and communities we support, and this process will serve to reinforce those relationships. Our operations remain steady and, by moving forward with new owners on stronger financial footing, I am confident that we will build on our proud history of leadership and innovation.”

Mr. Feder concluded, “Above all else, I want to thank our associates, whose commitment has been essential to our success. Their hard work and dedication are the cornerstones to continue delivering for our customers and manufacturer partners.”

Additional Information About the Court-Supervised Process

To ensure continued business operations, ATD has secured commitments for $250 million in new financing from the Ad Hoc Lender Group, as well as access to $1.2 billion in financing from lenders under the Company’s prepetition ABL facility (the “ABL Lenders”), in the form of postpetition financing credit facilities (together, the “DIP Financing Facilities”). Upon Court approval, the DIP Financing Facilities, coupled with cash generated from the Company’s ongoing operations, is expected to provide sufficient liquidity to support the business during the process.

ATD has also filed a number of customary “first-day” motions with the Court to maintain operations and uphold its go‑forward commitments to its stakeholders, including associates, manufacturer partners, customers, and vendors. The Company anticipates receiving approval for these routine motions in short order and expects to pay manufacturer partners and vendors for goods and services provided after the filing.

In connection with this process, Jim Bienias, Partner and Managing Director at AlixPartners, has been appointed Chief Restructuring Officer of ATD.

Additional information regarding ATD’s court-supervised sale process is available at a dedicated website, www.ATDNext.com. Court filings and other information related to the proceedings, including instructions on how to file a proof of claim, are available on a separate website administered by the Company’s claims agent, Donlin Recano & Company, at www.donlinrecano.com/atd, by calling toll-free at 1-866-666-1597 (or 1-212-771-1128 for calls originating outside the U.S. or Canada), or by sending an email to [email protected].

Advisors

Kirkland & Ellis LLP is serving as legal counsel, Moelis & Company LLC. is serving as investment banker, and AlixPartners is serving as restructuring advisor to ATD.

The Ad Hoc Lender Group is represented by Akin Gump Strauss Hauer & Feld LLP as legal counsel and Perella Weinberg Partners LP as financial advisor.

The ABL Lenders are represented by Otterbourg P.C. as legal counsel and PKF Clear Thinking, LLC as financial advisor.

Source: ATD