Ford's former partsmaking operations, Visteon Corp., has so far avoided Chapter 11 in the U.S., but its key British subsidiary is now in bankruptcy.
Is one of the Ford Motors Co.’s most critical suppliers, Visteon Corp, the next big victim of the automotive slump? The partsmaker recently sidestepped a crisis with a last-minute payment on debt, in the U.S. But Visteon officials may not be able to keep pulling rabbits out of their hat much longer, as the bankruptcy of a key British subsidiary strongly suggests.
The company has had to appeal to its creditors for temporary waivers and amendments to its primary secured credit facilities to continue to operate. The amendments buy the company some time while it continues to address its capital structure, engaging in “discussions with customers to address its liquidity and capital requirements,” Visteon said in statement released after the stock closed, on Tuesday, suggesting the situation has turned grave.
“Visteon is continuing discussions with its customers including Chrysler, Ford, GM, Honda, Hyundai, Nissan, PSA and Renault, regarding support and cooperation to assist the company in managing through the current environment. However, there can be no assurance that agreements regarding any such restructuring will be obtained,” the statement said.
Visteon is considered one of the industry’s most troubled suppliers and analysts have speculated in could disappear — soon. Despite the potential impact, however, Ford chief executive officer Alan Mulally has ruled out a bailout for Visteon.
Visteon also announced that its principal subsidiary, in Great Britain, Visteon UK Ltd, had gone bankrupt,t filing for “administration” with the UK High Court under the Insolvency Act of 1986. The administration order places Visteon UK Ltd under the temporary control of administrators from KPMG. Visteon UK Ltd includes plants in Basildon, Belfast and Enfield, employing approximately 600 people.
Other Visteon operations, including the Visteon Engineering Services Ltd. subsidiary, which employs approximately 400 people, are excluded from the administration decree.
“Visteon is committed to taking decisive actions in view of the current, challenging operating environment to protect the long-term viability of the business,” said Donald J. Stebbins, chairman and chief executive officer of Visteon Corporation. “Despite extensive restructuring efforts, the UK plants have continued to incur substantial losses. Regrettably, having exhausted all options, the Visteon UK Ltd board of directors had no alternative but to file for administration.”
Unite, a British union representing auto workers, warned that the bankruptcy once again pointed out the desperate problems besetting UK manufacturing. Tony Woodley, joint general secretary of Unite, said the shutdown of the old Ford Motor Co plants reflects the continuing decline of the British car industry and manufacturing sector.
“This is yet a further reminder that twenty thousand manufacturing jobs have disappeared since the economic slump took hold. Our manufacturing sector is in crisis. It needs serious strategic and financial help, and it needs it now.”
The same apparently could be said about Visteon’s U.S. operations.