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American Axle & Manufacturing Holdings Inc’s Future, what about others?

By Amarendra Bhushan for CEOWORLD Magazine Updated:March 13, 2009

American Axle & Manufacturing Holdings Inc said in a regulatory filing today that it may violate the terms of its loan agreements as the future of its primary customers are still in question.

General Motors Corp. and Chrysler LLC are American Axle’s largest customers, accounting for a total of 88% of American Axle’s sales in 2008.

“Should AAM fail to be in compliance with these covenants and we are unable to obtain a waiver or amend these covenants, we may be unable to continue as a going concern.”

“As a result of the current automotive industry environment and the uncertainty relating to the ability of GM and Chrysler to continue operating as going concerns …, it is uncertain whether we will be in compliance with the financial covenants … throughout 2009,” the company said in its annual filing.

American Axle & Manufacturing Holdings shares shrugged off early declines to take part in Friday’s broader market advance, bouncing back after bankruptcy fears were raised by the auto-parts maker’s auditor.

American Axle (AXL) stock added 8% to 81 cents and has doubled so far this week, taking a cue from the rally in shares of its biggest customer, General Motors Corp. (GM).

Chrysler and GM are awaiting additional federal aid after receiving $17.4 billion in December. The government must decide by March 31 if GM and Chrysler are to receive any of the roughly $22 billion the companies have requested, which they say is needed to stay afloat.

American Axle is the first major supplier to have auditors officially issue a going concern warning. Lear Corp. said two weeks ago that it expected a going concern notice, and GM received the warning last week.

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Tagged with: AAM, American Axle, American Axle & Manufacturing Holdings Inc, Chrysler, Chrysler LLC, G.M, General Motors Corp, Manufacturing, regulatory filing

Lean Automation

“As a result of the current automotive industry environment and the uncertainty relating to the ability of GM and Chrysler to continue operating as going concerns …, it is uncertain whether we will be in compliance with the financial covenants … throughout 2009,” there are lots of automotive companies that had declared bankruptcy well this is because of the economic downturn we are experiencing now a days