Two U.S. Auto Parts Manufactures File for Bankruptcy
May 28th, 2009Via: Reuters:
U.S. auto parts makers Visteon Corp and Metaldyne Corp filed for bankruptcy on Thursday, becoming the latest casualties of the global auto industry crisis and adding to the pressure on cash-strapped automakers.
Visteon, the former parts unit of Ford Motor Co , said the No. 2 U.S. automaker had made a commitment to support bankruptcy financing for its restructuring efforts to ensure continued supply of parts.
The filing comes at a time when Ford, the only U.S. automaker operating without emergency government loans, is struggling to survive the worst auto sales in nearly three decades which has sent Chrysler into bankruptcy and pushed General Motors Corp to the brink of failure.
GM had moved closer to filing the largest-ever bankruptcy for a U.S. industrial company, but GM and the U.S. Treasury had made a new offer for a crucial debt exchange that is backed by a committee for bondholders.
Ford, still Visteon’s biggest customer and which accounted for about 31 percent of its $1.35 billion of sales last quarter, did not detail the size of its bankruptcy financing for Visteon. Ford spun off Visteon in 2000.
“We have committed to support debtor-in-possession financing, but we anticipate others will also be involved,” Ford spokesman Todd Nissen said.
Kirk Ludtke, senior vice president at CRT Capital Group, said depending on the size, the bankruptcy financing may not have a significant impact on Ford’s liquidity.
“But Visteon is not the only troubled supplier. This could well start to add up,” Ludtke said.
Earlier this month, Ford assumed a $163 million secured revolving credit facility from Visteon’s lenders.
The health of the U.S. auto parts supply base has been a priority for Ford with Chrysler in bankruptcy and GM close to a government-imposed deadline of June 1 to restructure or follow Chrysler down that road.
“Ford’s top priority is to ensure we have sufficient parts and material to protect our production,” Ford global purchasing chief Tony Brown said in a statement.
“Ford has no intention of changing our fundamental business relationship with Visteon, including not buying back businesses or manufacturing operations,” Brown said, adding that Ford had not experienced any production issues as a result of Visteon’s business issues.
A disorderly failure of large suppliers would be costly to all major automakers manufacturing in North America, including Toyota Motor Corp and Honda Motor Co, due to the interlocking chain of the U.S. supply base.
