Key auto supplier Lear Corporation has reached an agreement with lenders for an amendment and waiver to its primary credit facility, it said in a press release. But, in a more detailed annual results statement to the US SEC, it noted it might nonetheless have to file for bankruptcy protection.
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“A default under our primary credit facility could result in a cross-default or the acceleration of our payment obligations under other financing agreements,” Lear told the Securities and Exchanges Commission. “In any such event, we may be required to seek reorganisation under Chapter 11.”
On 6 January, Lear said it was seeking an amendment and waiver under its primary credit facility in light of financial covenant defaults and adverse current and longer-term industry conditions.
Since then, has been in talks with lenders under its primary credit facility.
The agreement provides, until 15 May, a waiver of Lear’s existing defaults under its primary credit facility and an amendment of the financial covenants and various other provisions of the primary credit facility.
“The company and its lenders remain in active discussions regarding further modifications to its primary credit facility in light of existing and projected industry conditions,” Lear said in the press statement.
“Despite the challenging conditions we are facing, we continue to have a strong liquidity position,” said chairman, CEO and president Bob Rossiter.
Lear’s SEC filing also said it had hired legal and financial advisers to help review its strategic alternatives and that its auditors had said they were concerned at the supplier’s ability to survive as a “going concern.”
