Visteon Corp. exits bankruptcy with $600 million debt

Article by Christian A., on October 2, 2010

Visteon Corp. has officially emerged from bankruptcy with a debt that has been reduced by about $2.1 billion. Visteon, which had once been the No. 2 maker of auto parts in the US, was able to strengthen its balance sheet while in bankruptcy and as of June 30, had $979 million in cash.

Visteon expects an investment of $300 million from over 40 bondholders, including the distressed-investment units of Deutsche Bank Securities Inc. and Goldman, Sachs & Co., and hedge fund manager Stark Investments.

They’ve also agreed to buy $950 million of new shares when Visteon exits bankruptcy. About 39% of the company’s revenue came from Asia last quarter, up from 17% in 2005.

Kirk Ludtke, an analyst with CRT Capital Group LLC in Stamford, Conn., said that these figures will be attractive to investors. In May 2009, Visteon, formerly a division of Ford Motor Co., filed for protection from creditors. It pointed to the weakening economy and auto sales as what prompted it to file.

In a recent statement, Visteon said that it exited bankruptcy with about $600 million in debt, a considerable drop from when it had a debt of $2.7 billion when it entered protection.

It can be recalled that in February 2009, US auto sales dropped to a seasonally adjusted annual rate of 9.34 million, less than half the 20.7 million rate from July 2005.

Consumers had slowed spending due to the global recession, job losses and declining home values and stock prices. Consulting firm AlixPartners LLP said that in 2009, automakers and suppliers standing for about 38% of the North American auto industry, including General Motors Corp., Chrysler LLC and Lear Corp., filed for bankruptcy protection. [via Bloomberg]

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