Debtwire say that the US$135 million refinancing led by ING Bank for GST Autoleather has ‘skidded to a halt’, with a volatile market and the company’s delicate finances causing interested banks to step back.

Debtwire say that the European sovereign debt crisis is just the latest setback for the Michigan based company.

Efforts to refinance the loans backing private equity firm Advantage Partners’ US$300 million purchase of GST in April 2008 stalled following the Japan Earthquake and Tsunami in March. The disaster caused GST’s main Japanese clients – Toyota and Honda – to drastically scale back production and cut orders according to Debtwire sources.

ING, which co-arranged with GE Capital a US$172 million debt package to back Tokyo-based Advantage Partners’ buyout, resumed its pitches to potential investors in Hong Kong and Tokyo over the summer, the sources said.

Dennis Hiller, President and CEO, GST Autoleather told Leather International, ‘Even though we make it a practice not to comment on unauthorised press releases, I can state this one contains many factual deficiencies and attempts to draw the wrong conclusions.’ GST would make no further comment on the Debtwire report.

Debtwire claim that this is not the first time that the company has required financial help since the acquisition. A slide in Toyota’s sales impacted GST severely in 2008, causing it to breach financial covenants at the end of that year.

The business has stabilised since then, although their costs have been higher than expected, according to a Debtwire source. The final acquisition of Seton in early January has helped group income, and given GST additional business with premium carmakers in Germany, the source said.