Newcor files for Chapter 11

BLOOMFIELD HILLS, Mich. (Feb. 25)—Newcor Inc. today voluntarily filed for Chapter 11 bankruptcy protection. The company said it hopes to emerge from Chapter 11 late this year after reorganizing. Newcor said it has obtained interim financing to continue to deliver parts to its customers and to pay its 1,400 employees. "We needed to take this step to change the capital structure in order for us to return to profitability," co-CEOs David A. Segal and James J. Connor said in a written statement. Despite numerous cost reduction steps, Newcor's debt level, given the revenue generated in its business, was simply too much, they said. The parts maker in September missed a semiannual interest payment of about $6.1 million for senior subordinated notes related to a $125 million loan due in 2008. Aside from changes in management stemming from takeover attempts by shareholder Exx Inc., Newcor in 1999 began closing plants after its sales started to fall. The closures included an Auburn Hills, Mich., facility after sales of the rubber and plastic inner shift boots, grommets and seals produced there dropped 50 percent.