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15 Nov 2006

Hedge Fund commitee Object to Dura's Bankruptcy Filing

Hedge funds with large holdings in Dura Automotive Systems Inc.’s $1.7 billion debt are protesting the auto parts maker’s plan to finance its bankruptcy, saying the deal threatens to jeopardize their rights.

A committee made up of hedge funds that claim to own most of Dura’s $225 million in second-lien debt say they don’t like Dura’s plans. Dura listed assets of about $2 billion and debts of $1.7 billion.

The Rochester Hills-based auto parts supplier filed for Chapter 11 protection Oct. 30 with plans for a $300 million debtor-in-possession finance package that would allow it to pay off holders of first-lien debt, who are owed $125 million.

Auto suppliers have drawn more interest lately from private equity firms and hedge funds, an indication that there may be possibillities for the struggling sector to be turned around.

Several firms and hedge funds are vying for control of Delphi, and Visteon Corp. has drawn interest from hedge fund Pardus Capital Management. Lear Corp. recently closed a private stock placement with funds controlled by hedge fund investor Carl Icahn, who is set to become the supplier’s largest shareholder.

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