CORRECT: =UPDATE: Visteon 4Q Loss Widens, Heightening Bankruptcy Risk
February 25 2009 - 9:29AM
Dow Jones News
Visteon Corp.'s (VC) bankruptcy risk intensified Wednesday after
the auto-parts maker posted a wider fourth-quarter loss resulting
in its eighth-straight unprofitable year.
The auto-parts maker also said due to the industry's downturn,
it might violate its debt covenants.
"Visteon cannot assure that it will remain in compliance with
the terms of its outstanding debt instruments," the company said in
a statement. "Visteon continues to explore options to address
future liquidity needs, including administrative actions, delaying
capital expenditures, curtailing, eliminating or disposing of
substantial assets or operations, or undertaking other significant
restructuring measures."
Visteon reported a fourth-quarter net loss of $328 million, or
$2.53 a share, compared with a year-earlier net loss of $43
million, or 33 cents a share. The latest quarter included a $200
million write-down at its interiors business.
Revenue slumped 42% to $1.65 billion. Gross margin was negative
0.6%.
On average, analysts surveyed by Thomson Reuters projected a
loss of $1.70 a share on revenue of $1.93 billion.
The results underscore the dire situation facing Visteon, which
was spun off from Ford Motor Co. (F), as it struggles to stay out
of bankruptcy protection. The maker of satellite radios, instrument
displays and climate-control equipment hired legal and financial
advisers to prepare for possible bankruptcy proceedings in January,
according to a report in The Wall Street Journal. Visteon said has
been advised by Kirkland & Ellis and Rothschild since 2003.
The company - which on Wednesday announced the completion of its
three-year downsizing ahead of schedule - last month drew down
another $30 million from its credit facility and announced other
cost cuts, including suspending 401(k) matching contributions and
salary increases.
Ford, which is dealing with its own financial problems after
posting a historic $14.6 billion annual loss for 2008, said in
January it will not provide any special treatment for the parts
unit it spun off in 2000. "We're not contemplating any dramatic
action," Ford Chief Financial Officer Lewis Booth said at the
time.
Auto-parts makers of all stripes have been pressured as auto
production slumps because of sales tumbling to the lowest levels in
decades.
Visteon has continued to diversify away from Ford for the brunt
of its sales. Ford made up nearly 30% of product sales in the
quarter, while Hyundai Motor Co. (005380.SE) and subsidiary Kia
Motors Corp. (000270.SE) made up 28%. Europe and the Asia Pacific
region each made up nearly 35% of product sales.
Visteon's stock has fallen more than 95% during the past five
months and closed Tuesday at 15 cents.
-By Jeff Bennett, Dow Jones Newswires; 248-204-5542;
jeff.bennett@dowjones.com