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Ford deal to let Visteon exit Chapter 11

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Ford deal to let Visteon exit Chapter 11

David Shepardson / Detroit News Washington Bureau

Ford Motor Co. has reached a deal with its former parts unit, Visteon Corp., that should allow the Van Buren Township-based auto supplier to exit bankruptcy as early as this week.

As part of the deal, Ford agreed to give Visteon new and replacement business worth $600 million annually through 2013, and will waive $160 million in claims.

"The global settlement represents the final piece of the puzzle in Visteon's Chapter 11 reorganization and the restructuring of its commercial relationship with Ford," Visteon said in a court filing in U.S. Bankruptcy Court in Delaware.

A judge is to approve the deal today, clearing the way for Visteon to exit by Friday. Visteon spokesman Jim Fisher said the company was still aiming to be out of bankruptcy by Oct. 1.

The deal "effectively establishes a clean slate between Visteon and (Ford), allowing reorganized Visteon to take advantage of the long-term benefits of a strong commercial relationship with one of its largest customers," Visteon said in the filing.

Under the agreement, Visteon won't have to reimburse Ford for $105 million in pension and retiree benefit costs. In exchange, Visteon has agreed to drop claims filed against Ford.

After 15 months in bankruptcy, Visteon's revised reorganization plan was overwhelmingly supported by creditors and shareholders on Aug. 31.

One outstanding issue: Visteon will have to resolve some retiree health care claims.

As part of its bankruptcy exit plan, the partsmaker agreed to restore retirees' health care coverage during the bankruptcy stay.

Since it hasn't actually restored the coverage yet, Visteon will have to address those claims. Visteon plans to end coverage after it emerges from court protection.

Under the deal, the supplier agreed to pay $12 million to about 2,100 former Visteon workers represented by IUE-CWA retirees in exchange for terminating health care coverage. Visteon has did not offer similar payments to 4,500 UAW and salaried retirees who lost health care coverage.

From The Detroit News: http://www.detnews.com/article/20100929/AUTO01/9290321/1148/AUTO01/Ford-deal-to-let-Visteon-exit-Chapter-11#ixzz10vDHr1PU

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By Mark Kleis

We're nearing two years since the brunt of the economic collapse first hit the auto industry, with many manufacturers and suppliers still facing a long road to recovery.

For Visteon, the news that Ford has agreed to a deal that will waive $160 million worth of claims against the supplier, as well as guarantee $600 million of annual business each year through 2013 is a big step in the right direction.

The remaining claims by Ford were the only thing holding Visteon in Chapter 11, but claims actually went both ways. The agreement, as pointed out by The Detroit News, also removes claims by Visteon against Ford.

"The global settlement represents the final piece of the puzzle in Visteon's Chapter 11 reorganization and the restructuring of its commercial relationship with Ford," said Visteon in a Delaware U.S. Bankruptcy Court court filing.

One final hurdle

Although the deal struck with Ford is expected to be enough to have a judge sign off on the exit from bankruptcy on Wednesday, Visteon does still need to address remaining health care claims.

When Visteon entered bankruptcy it agreed to restore health care coverage for retirees, just during the stay. The problem is, Visteon never actually restored the coverage, so now it will have to fulfill backed claims. The deal calls for the supplier to pay $12 million to roughly 2,100 former Visteon workers who are members of the IUE-CWA, in exchange they will be allowed to terminate their health care coverage.



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Report: Visteon reaches pension agreement with Ford, eyes bankruptcy exit

by Chris Shunk (RSS feed) on Sep 29th 2010 at 1:33PM

Automobile parts supplier Visteon appears to be closer than ever to exiting bankruptcy after 15 long months of proceedings, with the help of the company's one-time master. The Detroit Free Press is reporting that Ford has agreed to waive $268 million in pension and retiree claims, relieving the troubled supplier of still more debt obligations. Further, The Blue Oval will reportedly commit to another $600 million in contracts, helping the supplier exit bankruptcy with a bit more work in queue.

When Visteon finally exits Chapter 11 proceedings, it will do so with a far healthier balance sheet, production capacity that is more in line with demand and less reliance on Ford Motor Company for business. But while the new Visteon will likely be profitable, the company won't be nearly as big as Ford's one-time captive supplier arm was 10 years ago. Visteon has shuttered or sold over 50 plants in the past decade while losing over 50,000 jobs.



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Visteon leaves bankruptcy protection

Car parts maker cuts its debt from $2.7B to $600M in 16 months

Mark Clothier / Bloomberg News

Visteon Corp., once the second-largest U.S. maker of auto parts, emerged from bankruptcy protection Friday after reducing its debt by about $2.1 billion.

More than 40 bondholders, including the distressed-investment units of Deutsche Bank Securities Inc. and Goldman, Sachs & Co., and hedge fund manager Stark Investments, agreed to invest $300 million in Visteon and buy $950 million of new shares when Visteon exits bankruptcy.

Visteon strengthened its balance sheet while in bankruptcy and had $979 million in cash as of June 30.

The company got 39 percent of its revenue in Asia last quarter, up from 17 percent in 2005, which should appeal to investors, said Kirk Ludtke, an analyst with CRT Capital Group LLC in Stamford, Conn. On Thursday, Ludtke raised his target price for the shares, when issued, to $67 from $58, and recommends investors buy them.

Visteon, a former division of Ford Motor Co., filed for protection from creditors in May 2009, citing the faltering economy and slowing auto sales. The Van Buren Township-based company said in a statement Friday that it exited bankruptcy with about $600 million in debt, compared with about $2.7 billion when it entered protection.

Visteon trades on the over-the-counter market. Jim Fisher, a company spokesman, declined to say when the shares may begin trading on a larger exchange.

U.S. auto sales fell to a seasonally adjusted annual rate of 9.34 million in February 2009, less than half the 20.7 million rate from July 2005, as a global recession, job losses and declining home values and stock prices caused consumers to slow spending.

Visteon, which makes heating and air-conditioning systems, door panels and engine-cooling systems, had sales of $6.69 billion last year, 66 percent less than its peak year of 2000. The company, led by Chief Executive Officer Don Stebbins, has one remaining factory and employs about 26,000, compared with 82,000 in 1998.

Visteon was spun off from Ford in June 2000 to give it more freedom to sell to other automakers. Ford accounted for 88 percent of its $19.4 billion in revenue the year before the spinoff.

From The Detroit News: http://www.detnews.com/article/20101002/AUTO01/10020332/1148/auto01/Visteon-leaves-bankruptcy-protection#ixzz11P1khu7h

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