LOS ANGELES, Aug. 23, 2012 (GLOBE NEWSWIRE) -- Motorcar Parts of America, Inc. (Nasdaq:MPAA) today announced its Fenco subsidiary has signed a multi-faceted strategic cooperative agreement with one of the world's largest automotive manufacturers of new undercar products -- including a $20 million trade line of credit for Fenco, joint sourcing and quality commitments, as well as expected joint product development and marketing initiatives.
"This strategic cooperative agreement will greatly enhance the liquidity of our Fenco subsidiary and should provide a strong strategic alliance for new product development for both our undercar and under-hood product lines. In conjunction with this agreement, M&T Bank, the current lender for Fenco, will extend the Fenco line of credit maturity until October 2014 and increase its line of credit by $5 million," said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts.
"This alliance is expected to greatly enhance the aftermarket industry position of Motorcar Parts of America and its subsidiaries for new and remanufactured units," Joffe added.In connection with the agreement and pursuant to a fully subordinated guaranty associated with the $20 million line of credit, Motorcar Parts of America has agreed to guarantee these obligations and provide the supplier with the right after July 1, 2014 to sell up to $8.0 million of outstanding obligations to the company in exchange, at the company's option, for shares of common stock valued at $7.75 per share, subject to certain adjustments, or cash in an amount of 135 percent of the amount of the outstanding obligations being sold to Motorcar Parts of America. The exercise of these options will reduce the company's liability with respect to the guaranty of the obligations. In connection with the line of credit agreement, the company has also agreed to issue a warrant to purchase 516,126 shares at an exercise price of $7.75 per share. The warrant is proportionately forfeited if the right to convert the loan is exercised.