Justice Sirikah

Chrysler to the Rescue as Visteon Corporation (PinkSheets: VSTN) Prepares a U-turn form Bankruptcy

by Justice Sirikah October 6, 2009
vstn_logo.jpg In a deal similar to the one struck with General Motors Company in September, Visteon Corporation (PinkSheets: VSTN) has agreed to shift business at its Highland Park plant in Michigan and another one in Saltillo, Mexico to other suppliers in exchange for about $31 million from Chrysler, as part of the parts-maker’s plan to exit bankruptcy protection. The fate of about 500 employees at the two facilities which makes door trim and cockpit parts for the Dodge Ram is still uncertain.

  Pending the commendations of the U.S Bankruptcy Court in Delaware, Chrysler has not later than March to either find a substitute supplier to contract, or buy the parts-making equipment and move it to another plant. Other than payment for the equipment, Visteon will also get paid with surcharges for the parts. This is expected to be able to temporarily arrest the parts-supplier’s funding crisis and also help it to venture into the more lucrative markets of climate controls and lighting parts for some Chrysler models.

  Last month Visteon which had filed for bankruptcy protection in May after a history of loss-making, also drew up a comparable settlement with GM, in which it would give up supply contracts for fuel tanks, climate controls and lighting systems whilst it stand to receive more than $23 million. This will lead to the closure or sale of Visteon facilities in Springfield, Ohio and Eureka in Missouri. As a result, GM will start resourcing manufacturing of climate control parts at Coclisa plant in Mexico.

  At the time of entering Chapter 11, the supplier of automotive technologies, modules and components declared assets worth approximately $4.6 billion and debt of $5.3 billion. For the three months to June, Visteon posted a loss of $99 million, up from $23 million in the same quarter of last year. Revenues also declined to $1.57 billion, from $2.91 billion reported last year. VSTN share last traded at $0.16, from a previous price of $0.17.

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