Ford may be forced to provide the majority, if not all, of the financing Visteon will need to reorganise and exit bankruptcy protection, industry analysts have said.
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“What we’ve committed to is to support the debtor in possession (DIP) financing for Visteon,” Ford spokesman Todd Nissen told Dow Jones. “We would anticipate that others would also be involved going forward.”
Visteon chief financial officer William Quigley said in a court filing Ford “has conditioned its continued support” on Visteon getting other customers to contribute to the reorganisation.
The company could need between $500m and $700m in DIP financing, Barclays Capital analyst Brian Johnson said in a research note cited by the news agency. That was based on the $510m in cash Visteon went through in the past year.
“With the way the credit markets are, I’m not sure anyone other than Ford or the federal government would provide the money,” Brad Coulter of turnaround firm O’Keefe & Associates told the news agency. “We are not seeing anyone wanting to get into the automotive space until everything shakes out. It’s kind of becoming Ford’s problem.”
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By GlobalDataFord accounted for 31% of Visteon’s worldwide sales in the first quarter of 2009, followed by Hyundai Motor and Kia.
“In supplier bankruptcy situations, it’s not our practice to provide DIP financing,” a spokesman for GM, which accounts for about 2% of Visteon sales, said.
Dow Jones noted that Chrysler, which accounted for 3% of Visteon’s sales, filed for bankruptcy protection on 30 April and would need both bankruptcy court and federal government approval to provide aid to Visteon.
Ford president of the Americas Mark Fields said the unspecified support for Visteon would “absolutely not” require it to seek US federal assistance.
“We have sufficient liquidity,” Fields told Dow Jones on the sidelines of an event in Houston. “Visteon is a very important supplier to us. We feel it is very important to protect our product.”
Visteon will seek to schedule a hearing on DIP financing in three weeks, giving it time to line up other lenders, the report added.
