Collins & Aikman enters customer agreements; annual prices to increase by $141 million

By Caroline Salls

Pittsburgh, Oct. 21 - Collins & Aikman Corp. entered into agreements to amend existing purchase orders with some of its customers, according to an 8-K filing with the Securities and Exchange Commission.

The agreements:

* Increase annual prices by $141 million under amended customer contracts;

* Allow customers to fund capital requirements of the company;

* Provide that customers may not re-source component parts currently under purchase orders with Collins & Aikman;

* Continue five-day payment terms from the customers; and

* Provide for $58.5 million in price surcharges.

The agreements vary in term, with most provisions expiring throughout 2006.

On Aug. 16, Collins & Aikman obtained final court approval for its customer financing agreement, which will provide $82.5 million of price increases under existing contracts, an additional $82.5 million of post-petition financing, together with funding of about $140 million of capital requirements.

Collins & Aikman's six largest customers, DaimlerChrysler AG, Ford Motor Co., General Motors Corp., Honda Motor Corp., Nissan Motor Co. and Toyota Motor Corp., signed the Aug. 16 agreement.

Collins & Aikman, a Troy, Mich.-based automotive company, filed for Chapter 11 on May 17 in the U.S. Bankruptcy Court for the Eastern District of Michigan. Its case number is 05-55927.

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