Cadence Innovation Files For Chapter 11 Reorganization

Reduced North American automotive production volumes in combination with increasing material costs squeeze financial liquidity

Company is working with customers and lender to determine best solution for all stakeholders

TROY, Mich., Aug. 26, 2008 - Cadence Innovation filed voluntary petitions for reorganization in a Delaware Federal Bankruptcy Court under Chapter 11 of the U.S. Bankruptcy Code.

The faltering economy and the increased cost of fuel have severely impacted the US automotive industry. The declining OEM production volumes and significant changes in vehicle segment mix in the US have reduced Cadence Innovation's revenues during a period of rapidly increasing materials costs. This combination of sky-rocketing material costs and quickly deteriorating revenue precipitated today's filing for protection.

The US-based operations consist of six active manufacturing plants plus various support facilities, all located in Michigan and Indiana. All of the company's European operations are excluded from this restructuring.

"The cause and effect in this situation is obvious and the cause is a clear set of external factors -- collapsing revenue and material costs increasing at double digit rates. The Cadence team has managed the internal issues exceptionally, and in most cases, we were prepared in advance of the next OEM plant shutdown or price increase from our supply base. We find the need to file for bankruptcy protection as a dreadful development, particularly given the commendable efforts of our workforce and the many sacrifices the Cadence Innovation team has made. The reality is that this groundswell of external factors and environmental change exceeds the flexibility of our business model, said Jerry Mosingo, President and Chief Executive Officer of Cadence Innovation.

During the process, Cadence Innovation expects to maintain current staffing levels at its plants and support facilities and will fund ongoing operations from debtor-in-possession (DIP) financing that is being used to supplement its working capital.

This is a planned and voluntary Chapter 11 filing and as such the company does not expect any disruption to the flow of product to our customer base. "From day one, we have always prioritized the welfare of our employees and the quality and delivery needs of our customers. We will continue to manage the company in that fashion," said Mosingo.

Cadence has been actively engaged in an effort to divest both its North American and European based operations and these activities will continue as the company moves through Chapter 11. While the bankruptcy filing process under Chapter 11 has a defined path and finite timeline, the divestiture process is not as predictable. As a result, the company cannot comment on the likely, or potential, end-state of the company.