* Deal includes loans to American Axle, warrants to GM
* Lenders agree to amend credit agreements
* American Axle expects Q3 profit
* Shares down 7 pct after rising 9 pct earlier
(Adds details on agreements, analyst's remarks, stock
activity, background, bylines)
By David Bailey and Kevin Krolicki
DETROIT, Sept 17 (Reuters) - American Axle & Manufacturing
Holdings Inc (AXL.N) said on Thursday it has reached a new
commercial agreement with General Motors Co [GM.UL], its main
customer, and a revised credit agreement with lenders.
The agreements, reached on Wednesday, include loans from GM
to American Axle and warrants to the parts supplier's former
parent. American Axle also negotiated amended credit
agreements, capping negotiations to keep it out of bankruptcy.
American Axle also said it expects to report a consolidated
third-quarter profit on sales of about $400 million.
"The (lender) agreement, in combination with the GM
agreement, will definitely be beneficial for them," Morningstar
analyst David Manger said. "It at least puts them through the
mid-term, but they still have some major customer and product
diversification issues."
Shares of American Axle were down 7 percent at midday on
Thursday on the New York Stock Exchange. Earlier in the day,
the shares rose as much as 9 percent after the announcement of
the agreements in a filing with U.S. securities regulators.
The stock had fallen to as low as 26 cents in March as GM's
own problems accelerated ahead of the automaker's bankruptcy,
but has rallied sharply since late July on expectations that
American Axle would reach a deal with its creditors.
Detroit-based American Axle had received four extensions of
its credit agreements while it completed the discussions with
lenders and GM, which has at times accounted for three-quarters
of the supplier's revenue.
American Axle issued warrants for 4.1 million shares of its
stock to GM on Wednesday at an exercise price of $2.76 per
share. It also agreed to issue another 6.9 million warrants at
the same exercise price based on a second lien term loan the
automaker has agreed to give to American Axle.
The warrants can be exercised through Sept. 16, 2014.
GM agreed not to acquire more than 20 percent of American
Axle, which was created out of GM plants bought by investors
led by Chief Executive Officer Dick Dauch in 1994.
In addition, GM paid American Axle $110 million to resolve
costs related to the automaker's bankruptcy and other
obligations and agreed to make expedited parts payments through
June 2011 in exchange for a 1 percent discount.
GM also agreed to provide a second lien term loan facility
of up to $100 million to American Axle that would not be
prepayable before the end of June 2011 unless the cash was
generated from ordinary operations.
The terms of GM's financial support had been previously
disclosed as American Axle worked on a deal with lenders to
keep it out of bankruptcy.
American Axle is a critical supplier to GM's SUV and pickup
truck programs. A strike at the parts maker in 2008 led to
widespread shutdowns at GM plants due to parts shortages.
The parts maker said it expects third-quarter results to
include the favorable impact from pension and post-retirement
benefit curtailment gains of up to $40 million.
American Axle expects to have more than $300 million of
liquidity at the end of September including available cash,
short-term investments and committed borrowing capacity under
the U.S. credit facilities.
The company had only $1 million available on its credit
facility at the end of June. The revolving credit facility has
allowed the company to borrow up to $476.9 million through
April 2010.
The parts maker was required to maintain at least $75
million in cash during the period when it was negotiating with
lenders, but under the negotiated changes that figure was
raised to $85 million through next June.
Major lenders to American Axle include JPMorgan Chase & Co
(JPM.N), Bank of America Merrill Lynch (BAC.N) and Wachovia
Corp, owned by Wells Fargo & Co (WFC.N).
American Axle shares were down 57 cents or 7 percent at
$7.56 on the New York Stock Exchange at midday on Thursday, off
an earlier high at $8.88.
(Reporting by David Bailey and Kevin Krolicki, editing by Dave
Zimmerman and Matthew Lewis)
