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Troubled US-owned automotive supplier Collins & Aikman has agreed to sell its North American flooring and acoustic components business to International Automotive Components Group North America.

The deal, which has to be approved through C&A's bankruptcy court auction process, would provide $134 million in cash and C&A's debtors would also be able to take up stock options in IAC up to 25 per cent of the group's value.

John Boken, chief restructuring officer for Collins & Aikman, said: "The sale of our soft trim business is one of the most important elements of our efforts to maximise creditor recoveries and preserve jobs for our employees. Our soft trim management team has done an outstanding job of operating this portion of our business throughout the many facets of these bankruptcy proceedings."

The businesses being covered in the agreement to acquire include 16 factories in the US, Canada and Mexico and employ around 4,300 people. They have annual revenues of around $615 million and produce moulded floors, accessory mats, dashboard insulators, package trays, trunk liners and other "soft" automotive items.

IAC is a joint venture between WL Ross, Franklin Mutual Advisers and Lear. It previously bought C&A's European and South American operations, Mitsuboshi Belting in Japan and the European interiors business of Lear.

C&A filed for Chapter 11 protection on 17 May 2005. Under US bankrutpcy law, asset sales are subject to a court-controlled auction process. C&A and IAC will ask the court to start that process tomorrow with the aim of concluding the deal on 24 May 2007.