Apollo Global’s Lumileds units in the United States and the Netherlands file for Chapter 11 bankruptcy (NYSE:APO)

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Lumileds, a manufacturer of automotive and other LED lighting products, majority-owned by Apollo Global Management (NYSE: APO), has filed Chapter 11 bankruptcy proceedings for its US and Dutch units in a plan to reduce its debt by about $1.3 billion, the company announced Monday.

The company has already received support from a majority of its lenders to confirm the plan before initiating proceedings and expects to be out of Chapter 11 in about 60 days. The restructuring support agreement with its lenders holding a significant majority of outstanding loans under its pre-petition senior loan facility would reduce its balance sheet by more than approximately $1.3 billion, accelerate the growth of Lumileds and would allow investments in innovation to pursue additional strategic strategies. opportunities through the injection of up to $275 million in cash, the company said in a statement.

The Company’s European, Asian and foreign subsidiaries and affiliates are not included in the filing and are not affected by the Chapter 11 process.

“We have taken proactive steps to deleverage our balance sheet given the ongoing challenges presented by global supply constraints, COVID-related issues and the crisis in Ukraine. This recapitalization will allow us to further accelerate our efforts as a market-leading innovator within the specialty lighting industry,” said Matt Roney, CEO of Lumileds.

As part of the restructuring support agreement, existing secured lenders are expected to commit to support and vote in favor of a transaction that will reduce Lumileds’ funded debt from approximately $1.7 billion to $400 million, consisting of feedback debt and post-petition loans, which will be combined into a five-year exit facility.

The RSA also contemplates a commitment from certain lenders of up to $275 million in debtor-in-possession financing, available through the Chapter 11 process. This financing, together with the company’s available cash reserves and the cash provided through operations, are expected to provide sufficient liquidity for Lumileds to continue to meet its outstanding obligations, including all obligations to customers, vendors, and suppliers, as well as wages, salaries, and benefit programs.

Apollo (APO) acquired an 80% stake in Lumileds from Philips (PHG) in 2017 in a $1.5 billion transaction.

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