Lear remains in talks with lenders and potential investors to restructure its debt-laden balance sheet and the discussions are “constructive,” a top executive said.
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Lear, which warned in March that it might have to file for bankruptcy, has “too much debt” and is exploring alternatives to restructure its debt outside of bankruptcy, executive vice president Daniel Ninivaggi told Reuters.
The company is expected to announce the results of its discussions prior to 30 June, through which its lenders have agreed to waive the existing defaults under its primary credit facility, Ninivaggi said.
The supplier was in breach of its leverage covenants at the end of 2008 after borrowing all of the US$1.2bn available to it under the primary credit facility during the fourth quarter.
“We will find a fix to the problem,” Ninivaggi said. “The discussions are constructive.”
Ninivaggi told Reuters estimates from auto industry trade groups showed that the US supply base needs between $10 and $15bn in capital to ramp up production in the third quarter after extensive shutdowns this summer.
The US government would likely have to support the bulk of the financing in order to prevent a disorderly failure of the US supply industry amid the lack of private capital, he said.
“We agree that suppliers need some support to ramp up production in the third quarter. The government needs to play a supportive role,” Ninivaggi told Reuters.
