Visteon's bankruptcy makes it the latest casualty in the U.S. auto industry, which has been hit by the Chrysler LLC bankruptcy and awaits an imminent filing by General Motors Corp. Though expected for months, a Visteon filing could complicate matters for Ford, the one Detroit auto maker to so far avoid government aid. Visteon doesn't have any financing lined up from banks, and will have to lean heavily on Ford and other auto companies for cash to get it through a restructuring.
"Visteon is taking this step to maximize the long-term value of the company," Visteon Chief Executive Donald J. Stebbins said in a written statement. "During the reorganization period, we will seek to address our capital structure and legacy costs that are not sustainable given the current economic environment." "Ford's top priority is to ensure we have sufficient parts and material to protect our production," Ford's Global Purchasing Group Vice President Tony Brown said in a written statement.
Visteon expects to fund its operations with its U.S. cash balance, cash flows from operations and a debtor-in-possession facility. Ford has executed a commitment letter to support debtor-in-possession financing for Visteon's restructuring efforts and to ensure long-term continuity of supply. Other global customers have also expressed their support, the company said. As of Dec. 31, Visteon employed 11,000 salaried workers and 22,500 hourly workers worldwide. It also had $893 million in unfunded pension obligations.