ArvinMeritor Selling Wheels Unit

Auto parts supplier posted $162 million loss for fiscal third quarter and agreed to sell its wheels business, the latest in a series of divestitures.

TROY, Mich. (AP) -- Auto parts supplier ArvinMeritor Inc. posted a $162 million loss Tuesday for its fiscal third quarter as worldwide vehicle production fell and said it has agreed to sell its wheels business, the latest in a series of divestitures.

The company said it expects lower revenue and a wider loss per share for the current quarter than in the third quarter. But it still expects to be in compliance with debt convenants next month.

Its shares fell more than 7 percent in afternoon trading Tuesday.

ArvinMeritor said it is selling the wheels business, a division of its LVS segment, to Iochpe-Maxion S.A. of Brazil for $180 million.

It expects the deal to close on or before Sept. 23, prior to the end of its fiscal fourth quarter, subject to approvals in the U.S., Mexico and Brazil.

The sale comes after shedding several other units, including most of its chassis systems business, as it focuses on its commercial vehicles business. Parts of the chassis systems divestiture were completed in the most recent quarter.

ArvinMeritor, which makes integrated systems, modules and components for commercial trucks and light vehicles, said it lost the equivalent of $2.23 per share in the quarter ended June 30, compared with a profit of $44 million, or 60 cents per share, in the year-ago period. The results included discontinued operations.

Excluding the units being sold, the loss was 39 cents per share. Further adjusting for 9 cents per share in restructuring charges, a penny per share in separation costs and 4 cents in non-cash charges related to tax matters, the loss from continuing operations was 25 cents per share.

Analysts polled by Thomson Reuters, on average, expected a loss of 31 cents per share and their estimates typically exclude one-time items.

Sales fell 47 percent to $993 million from $1.88 billion last year. The drop reflected lower production of vehicles worldwide, the company said. Excluding the impact of foreign exchange, sales fell 42 percent. Analysts were looking for higher revenue of $1.21 billion.

Commercial vehicle systems sales plunged 49 percent, to $683 million, while light vehicle systems sales dropped 40 percent to $310 million.

ArvinMeritor said it has identified actions that should allow it to meet its debt covenants in September, including the sale of the wheels business. The company is in negotiations with potential lenders for a replacement for its U.S. securitization program, and expects to complete a deal by the end of the month. If it is unable to complete the necessary actions before the September deadline, it will seek an amendment or waiver on its revolving credit agreement.

Chairman, CEO and President Chip McClure said "market conditions will remain tough" through the current quarter. Markets remain depressed in North America and Europe, the company said, but South America and Asia Pacific are showing signs of improvement.

Nevertheless, the company expects revenue for the fiscal fourth quarter to drop below third-quarter levels, and the loss per share to be greater. It did not offer specific guidance, but the statement implied it will miss Wall Street forecasts.

Analysts expect a fourth-quarter loss of 5 cents per share, on revenue of $1.26 billion.

In afternoon trading, ArvinMeritor shares fell 50 cents, or 7.3 percent, to $6.39.

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