NEW YORK (AP) — Automotive parts supplier Lear Corp. said Wednesday it is preparing to file for Chapter 11 bankruptcy protection and has lined up financing to fund its operations while under court protection.
Lear, which makes automotive seating systems and electronics, said it is still negotiating with lenders and bondholders for additional support for its restructuring plan. In the meantime, the company said it has a commitment for $500 million in loans to finance its bankruptcy from a group of lenders led by J.P. Morgan and Citigroup.
Lear spokesman Mel Stephens declined to say how many of its lenders are board with the Chapter 11 plan, how much more support it is seeking or when or where the Southfield, Mich.-based company plans to file for court protection.
"We intend to complete the restructuring as quickly as possible and emerge as an even stronger and more competitive partner to our customers," Lear CEO Bob Rossiter said in a statement.
Lear said it expects to default on a $38 million interest payment that would service its 8.5 percent senior notes due 2013 and its 8.75 percent senior notes due 2016. A 30-day grace period on the payment expires on Thursday, the company said.
Lear said its operations outside the United States would be unaffected by a bankruptcy protection filing.
A filing for Lear would make it the first major automotive parts maker to seek court protection since Visteon Corp., the former parts arm of Ford Motor Co., filed for Chapter 11 in May. Parts suppliers have been battered by the economic downturn as consumers continue to shun new car purchases and automakers slash production.
Lear in particular is heavily dependent on the slumping North American and European auto markets, with 36 percent of its sales coming from North America and 49 percent coming from Europe.
Lear, which posted $13.6 billion in sales for 2008, is a key supplier for both General Motors Corp. and Ford Motor Co. The pair represent the company's two largest customers and account for a combined 40 percent of its sales.
Lear is also one of Ford's key component and service suppliers, part of Ford's Aligned Business Framework, which increases the automaker's collaboration with the companies.
Auto sales in June continued to remain troubled though the downturn that has plagued the industry for at least a year showed signs of easing, according to monthly sales reports from carmakers Wednesday. Industrywide sales fell 28 percent in June, according to Autodata Corp. Volumes are down 35 percent the first half of the year.
Shares of Lear fell 17 cents, or 35 percent, to 31 cents in after-hours trading, following a loss of 2 cents, or 4 percent, at its close Wednesday of 48 cents.
by the associated press
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Wednesday, July 1, 2009
GM’s top executive, ‘new’ company bankcrucy
NEW YORK — General Motors’ Chief Executive was grilled by a string of lawyers Tuesday about his company’s bid to sell its "good” parts into a new company and emerge from bankruptcy protection.
GM, whose June 1 filing for bankruptcy protection was the fourth-largest in U.S. history, is hoping to avoid a lengthy sale hearing that could postpone its emergence from Chapter 11. Last month, objections from a group of bondholders and others dragged out rival Chrysler LLC’s sale hearing for three days.
At a packed Manhattan courthouse Tuesday, Fritz Henderson was questioned for around five hours by attorneys for the various parties challenging the sale, including bondholders, consumer groups and unions.
Despite U.S. Judge Robert Gerber’s urging the attorneys to keep their arguments concise and to avoid redundancies, the hearing dragged on as a parade of lawyers made their way up to the podium.
"I think people have forgot why we’re here and what we have to accomplish,” Gerber said sharply. "I’m not going to deny anybody due process, but I expect the questioning to be more focused.”
Henderson wasn’t fazed by his lengthy stay on the stand, answering questions quickly and directly for the most part.
When asked about the current condition of GM, Henderson testified that June sales were "slightly better than expected” excluding fleet sales.
Fate of claims
Consumer groups and several individuals with product-related liability claims are objecting to the sale because people with pending product-related liability claims against GM will be forced to seek compensation from "Old GM,” the collection of mostly unprofitable assets leftover from the sale where there likely will be nothing left to pay their claims.
Early on in the hearing, Mark Salzberg, an attorney for a group of bondholders, questioned why GM would opt for a sale plan instead of a restructuring plan, charging that the automaker took that route to make it harder for its creditors to negotiate.
But Harvey Miller, an attorney from GM, questioned the validity of the bondholder group’s challenge, noting that it only has three members, one of which bought his bonds for 2 cents on the dollar, while the other two spent no more than 20 cents on the dollar for theirs.
Besides the bondholders, a trio of labor unions are trying to block the sale. Unlike the UAW, which brokered a deal for a stake in the company, those unions say they won’t have anything to pay for retiree health care.
Henderson said retiree benefits for the three unions cost GM about $26 million a month.
by the associated press
GM, whose June 1 filing for bankruptcy protection was the fourth-largest in U.S. history, is hoping to avoid a lengthy sale hearing that could postpone its emergence from Chapter 11. Last month, objections from a group of bondholders and others dragged out rival Chrysler LLC’s sale hearing for three days.
At a packed Manhattan courthouse Tuesday, Fritz Henderson was questioned for around five hours by attorneys for the various parties challenging the sale, including bondholders, consumer groups and unions.
Despite U.S. Judge Robert Gerber’s urging the attorneys to keep their arguments concise and to avoid redundancies, the hearing dragged on as a parade of lawyers made their way up to the podium.
"I think people have forgot why we’re here and what we have to accomplish,” Gerber said sharply. "I’m not going to deny anybody due process, but I expect the questioning to be more focused.”
Henderson wasn’t fazed by his lengthy stay on the stand, answering questions quickly and directly for the most part.
When asked about the current condition of GM, Henderson testified that June sales were "slightly better than expected” excluding fleet sales.
Fate of claims
Consumer groups and several individuals with product-related liability claims are objecting to the sale because people with pending product-related liability claims against GM will be forced to seek compensation from "Old GM,” the collection of mostly unprofitable assets leftover from the sale where there likely will be nothing left to pay their claims.
Early on in the hearing, Mark Salzberg, an attorney for a group of bondholders, questioned why GM would opt for a sale plan instead of a restructuring plan, charging that the automaker took that route to make it harder for its creditors to negotiate.
But Harvey Miller, an attorney from GM, questioned the validity of the bondholder group’s challenge, noting that it only has three members, one of which bought his bonds for 2 cents on the dollar, while the other two spent no more than 20 cents on the dollar for theirs.
Besides the bondholders, a trio of labor unions are trying to block the sale. Unlike the UAW, which brokered a deal for a stake in the company, those unions say they won’t have anything to pay for retiree health care.
Henderson said retiree benefits for the three unions cost GM about $26 million a month.
by the associated press
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