Visteon shares jumped at the end of last week following reports – unconfirmed – that the company has reached a deal to sell unprofitable plants back to its former parent Ford Motor Co.
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The Detroit News reported Friday that Visteon, the second-largest U.S. auto supplier, has reached a tentative agreement to sell between thirteen and fifteen unprofitable U.S. plants back to Ford. Under the agreement, Ford would likely keep two of those plants and spin eleven to thirteen others into a separate holding company, the newspaper said.
The report said that the United Auto Workers union is scheduled to meet Tuesday with Ford and Visteon officials to approve the deal, which would offer early retirement or buyout packages to 5,000 UAW workers at Visteon.
Ford and Visteon began talks in September aimed at allowing Visteon to shed some parts of its business to improve efficiency while still meeting its obligations to Ford. Ford, which spun Visteon off in 2000, still makes up around 70 percent of Visteon’s business.
Analysts say that Ford is keen to get a deal with Visteon and secure supply lines in the face of pressures in the industry that have sent a number of suppliers into bankruptcy.
Troubled Visteon has also announced that it has reached an agreement with its lenders to amend the terms on loans and prevent a default. The agreement with a syndicate of lenders amends terms on some $1.6 billion credit facilities to prevent a default.
Visteon said that lenders agreed to extend the deadline delivery of its first-quarter financial statements. The deadline has been postponed to July 29 from June 9.
Companies that miss filing audited financial statements with the Securities and Exchange Commission can trip bond covenants, which would send the borrowing into default, AP reported.
