March 3 (Bloomberg) -- Dana Corp. filed for bankruptcy, becoming the fourth major U.S. auto-parts maker to seek protection in the past 13 months as Ford Motor Co. and General Motors Corp. cut production.

The supplier said it has $1.45 billion in financing to keep operating while reorganizing in bankruptcy court in New York. Toledo, Ohio-based Dana won approval today to use $800 million of that money. Its filing, which covers its U.S. operations, lists assets of $7.9 billion and debt of $6.8 billion.

Dana, a 102-year-old company that's the world's biggest maker of light-truck axles, follows Delphi Corp., Tower Automotive Inc. and Collins & Aikman Corp. into Chapter 11 protection from creditors. Ford and GM are Dana's biggest customers. The company had a $1.27 billion loss in the third quarter, the most recent results it has posted.

``One of the key issues is that Ford and GM are only beginning to deal with their problems, so although you may see some of these companies come out of bankruptcy, there may be a second day of reckoning with Ford and GM,'' said Shelly Lombard, an analyst at New York-based research firm Gimme Credit.

Dana said that all its plants will continue to operate and that it will go ahead with plans to close factories, divest businesses and cut costs. Its filing comes after Dana missed $21 million in bond interest payments on March 1. The bankruptcy case was assigned to Judge Burton Lifland.

The Dana filing is the largest in the U.S. this year. Calpine Corp. filed the biggest bankruptcy of 2005, with $26.6 billion in assets and $22.5 billion in debt. Delphi Corp., which sought protection for its U.S. operations in October, is the biggest auto-related filing, with $17.1 billion in assets.

Court Hearing

The company will use the $800 million for employee compensation and to buy parts and materials, it said in a statement.

``Keeping our supply lines going is absolutely critical,'' said Corinne Ball, a lawyer representing Dana. ``Failing that, we will shut our customers down,'' citing automakers Ford, GM and DaimlerChrysler AG.

`Fix Our Business'

``The Chapter 11 process provides the company an opportunity to fix our business comprehensively -- financially and operationally,'' Chief Executive Officer Michael Burns said in a statement. In addition to Ford and GM cuts, Dana has been hurt by an ``unprecedented level'' of expenses for steel and related products, he said in a court filing.

Burns, a former GM executive, has led Dana since March 2004. The company has 44,000 employees, including 19,000 in the U.S. Unions represent 7,200 of the U.S. workers.

The parts supplier is meeting with automakers and the United Auto Workers, its biggest union, spokesman Chuck Hartlage said. Dana's debtor-in-possession financing came from Citigroup, Bank of America and JPMorgan Chase.

Ball said it is ``too early to tell'' if the company will seek court permission to reject its contracts with unions.

``Ford is working closely with Dana to ensure there is no disruption in parts delivery to Ford plants,'' said Paul Wood, a spokesman for the automaker.

Ford represents 25 percent of Dana's revenue, and the supplier provides parts such as axles and frames for Ford's F- Series pickup trucks, the best-selling vehicle line in the U.S. Dana also builds frames for GM light trucks such as the Hummer H3 sport-utility vehicle and Chevrolet Colorado pickup. GM accounts for 11 percent of Dana sales.

Ford and GM cut North American production through 2005 as they lost U.S. sales and market share to Asian rivals such as Toyota Motor Corp. Both U.S.-based automakers are trimming thousands of jobs and closing plants in North America as they try to stem automotive losses in the region.

`Distressed' Industry

Automaker cutbacks have forced similar moves at suppliers, which has shifted work to lower-cost regions such as Asia and eastern Europe. Delphi and Tower in their reorganizations have pressed U.S. unions for lower wages and reduced benefits.

``It's just another sign of how distressed the automotive industry is right now,'' Tower spokesman Joel Weiden said during a break in proceedings in Tower's bankruptcy in New York, where it's seeking wage and benefit cuts from unions and retirees.

Dana has closed plants and eliminated jobs because of material costs, internal delivery problems and lower demand. The company traces its roots to 1904 when Clarence Spicer began marketing a universal joint and driveshaft for automobiles.

`Major Steps'

``We took a number of major steps to strengthen the company such as consolidating or closing about 40 facilities, divesting assets and reducing the workforce by about 35 percent,'' Hartlage said. ``In the end we could not reach the cost reduction we needed.''

Miller Buckfire & Co. will serve as its financial adviser in the reorganization. AlixPartners will provide restructuring advice, the parts supplier said. Its legal team is from New York- based Jones Day.

Dana shares fell 38 cents to 66 cents in New York Stock Exchange composite trading at 4:07 p.m., and the NYSE said it suspended the stock. The shares have fallen 90 percent this year. They closed as high as $61.19, in April 1998.

Bonds Rise

The company's 5.85 percent notes that mature in 2015 rose 4 cents on the dollar to 68.5 cents on the dollar at 5:12 p.m., according to Trace, the price reporting service of the NASD. The yield fell to 11.08 percent from 12 percent. Earlier, the bond was the most active among institutional traders, with 79 trades of more than $1 million, and Dana was the most active credit traded on Trace with 261 trades of more $1 million.

Dana's bond prices are rising because of concern that demand for the debt to settle derivative contracts will exceed supply, Bank of America analyst Glen Taksler said in a research note. There are more debt insurance contracts in the market than bonds and loans that can be used to settle them, he said.

Dana expanded through acquisitions during the 1990s as automakers pushed their biggest suppliers for worldwide operations and wider product lines. Dana added more than $5 billion in annual sales through acquisitions in 1997 and 1998, including SPX Corp.'s Sealed Power unit and Echlin Inc.

That helped more than double sales to $12.3 billion in 2000 from a decade earlier, according to annual U.S. regulatory filings. Long-term debt also rose, from $1.7 billion at the end of 1996 to $3.22 billion at the end of 2002.

Scaling Back

Amid net losses in 2001 and 2002, Dana began selling off businesses, including the November 2004 divestiture of most of its replacement auto-parts unit. The company also slashed 11,250 jobs and closed 30 factories and offices during 2001 and 2002.

Sales fell to $9.06 billion in 2004, and the company trimmed long-term debt by the end of that year to $2.05 billion.

Dana reported net income of $222 million in 2003, and profit fell to $82 million in 2004. Through three quarters of 2005, its net loss was $1.23 billion, including third-quarter costs of $918 million to write off tax benefits and $218 million to writedown the value of three businesses it plans to sell.

The company in October said it planned to reduce its 46,000- person hourly workforce by 23 percent and sell engine-parts, fluid products and pump products businesses.

Speculation about Dana filing for bankruptcy started as early as Jan. 17, when it announced the third-quarter loss.

On Feb. 21, Dana said its board would postpone the 1-cent-a- share quarterly dividend until it could review fourth-quarter results. Dana has said it would have those results in March.

On Feb. 24, the Wall Street Journal reported that Dana had hired bankruptcy adviser Miller Buckfire.

Dana said Feb. 27 that it was in talks with lenders about changing the terms of its loans and expected to reach an agreement within two weeks. The company announced March 1 that it missed the bond interest payments.

The company is the subject of a formal probe by the U.S. Securities and Exchange Commission, which is investigating after Dana restated 5 1/2 years of results on Dec. 30 because of accounting mistakes. Dana is also facing shareholder lawsuits.

The bankruptcy case is: In re Dana Corp., 06-10354, U.S. Bankruptcy Court, Southern District of New York.

To contact the reporter on this story: Jeff Bennett in Southfield, Michigan, at jbennett17@Bloomberg.net

Last Updated: March 3, 2006 19:54 EST