Ford Motor Co has agreed to provide no less that US$125m to Visteon in a credit facility, the components company said in an SEC filing today.
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Visteon filed for Chapter 11 last week. It was spun off from Ford in 2000.
The SEC filing said that Ford will provide no less than $125 million under the terms of a senior, super-priority debtor-in-possession revolving credit facility.
It went on to say that the terms of the agreement, including the aggregate size and the permitted use remain subject to contingencies including receipt of commitments from Visteon’s other customers to participate in the facility.
The finalised bankruptcy financing facility must be in place by June 30, when Ford’s commitment is set to expire.
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.
“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.
