Collins & Aikman seeks court OK to sell 69% membership interest in joint venture

By Caroline Salls

Pittsburgh, Aug. 3 - Collins & Aikman Corp. requested court approval to sell its membership interests in Collins & Aikman Mobis, LLC, according to a Thursday filing with the U.S. Bankruptcy Court for the Eastern District of Michigan.

Debtor Collins & Aikman Products Co. owns 69% of the membership interests in joint venture Collins & Aikman Mobis, LLC and Mobis Alabama, LLC.

An otherwise unrelated third party owns the remaining 31% of the membership interests.

According to the release, the joint venture has not been a profitable investment for Collins & Aikman recently.

Because the entity is a joint venture with a single partner, and because the joint venture currently sells products exclusively to affiliates of Mobis Alabama, Collins & Aikman determined that the sale of its interest in the joint venture to Mobis Alabama would maximize the value of this asset.

Under the purchase agreement, Collins & Aikman will sell the interest to Mobis Alabama for $3.92 million.

In addition, the joint venture will pay $7.54 million to Collins & Aikman for an intercompany payment.

Collins & Aikman will continue to supply the joint venture and Mobis Alabama some of their required products, and Collins & Aikman will be considered a preferred supplier to Mobis and Hyundai Mobis, with Collins & Aikman receiving preferred rights to bid on some new products.

A hearing is scheduled for Aug. 17.

Collins & Aikman, a Troy, Mich.-based automotive company, filed for Chapter 11 on May 17, 2005. The case number is 05-55927.

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