UPDATE 4-U.S. parts makers Visteon, Metaldyne file for Chap 11

Thu May 28, 2009 9:48pm IST

Stocks

   

 * Ford commits support to DIP financing for Visteon
 * Ford says no intent to buyback Visteon businesses
 * Carlyle Group and RHJ offer to buy Metaldyne assets
 * Non-U.S. ops of both companies excluded from filings
 (Recasts first sentence, adds analyst comments, details on
Ford, changes dateline from BANGALORE)
 By Soyoung Kim and David Bailey
 DETROIT, May 28 (Reuters) - U.S. auto parts makers Visteon
Corp VSTN.PK 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 (F.N), 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 (GM.N) 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. [ID:nN28324145]
 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 (7203.T) and Honda Motor Co (7267.T), due to
the interlocking chain of the U.S. supply base.
 METALDYNE SALE PLANNED
 Both Visteon and Metaldyne Corp, a unit of Japan's Asahi Tec
5606.T, said the bankruptcy filings do not include their
non-U.S. entities or operations.
 Visteon, which filed for court protection in the U.S.
Bankruptcy Court for the District of Delaware, said it would
continue its operations throughout the reorganization process.
 The first bankruptcy hearing is expected to take place on
Friday in Delaware. Visteon will be seeking approval of regular
motions to continue operations during the reorganization.
 Visteon listed total assets of $4.58 billion and total debts
of $5.32 billion. Its unsecured creditors include a unit of Bank
of New York Mellon Corp (BK.N) holding bond debt, the Pension
Benefit Guaranty Corp and IBM (IBM.N).
 Metaldyne, a supplier of metal-based auto components, said
it would sell a majority of its assets as going concerns under a
court-supervised process.
 Plymouth, Michigan-based Metaldyne filed for Chapter 11 in
the U.S. Bankruptcy Court for the Southern District of New
York.
 RHJ International SA (RHJI.BR), which owns a 60 percent
stake in Asahi Tec, and private equity firm Carlyle Group
[CYL.UL] separately submitted letters of intent to purchase
different portions of Metaldyne assets, Metaldyne said.
 Metaldyne said Asahi Tec will not continue its economic
support for the company. RHJ said it would buy a majority of
Metaldyne's assets. [ID:nWEA4588].
 Carlyle has proposed a purchase of certain of Metaldyne's
Chassis business assets in the United States, Mexico and Spain,
Metaldyne said.
 In re Visteon, U.S. Bankruptcy Court, District of Delaware,
No. 09-11786.
 (Additional reporting by Caroline Humer and Paritosh Bansal in
New York and Ajay Kamalakaran in Bangalore; Editing by Erica
Billingham and Matthew Lewis)


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