Visteon Avoids Bankruptcy

Auto parts supplier says it made a bond payment in full by a Tuesday deadline, avoiding a default that threatened to send the company into bankruptcy.

DETROIT (AP) -- Auto parts supplier Visteon Corp. said it made a major payment on outstanding bonds by a Tuesday deadline, avoiding a default that had threatened to send the company into bankruptcy protection.

A spokesman for the Van Buren Township, Mich.-based company said it made an interest payment of about $16 million on bonds set to mature in 2014. Some analysts had said Visteon -- the former parts supplier for Ford Motor Co. -- would miss the payment and instead file for Chapter 11 bankruptcy protection.

"Our bond interest payment was paid in full today, and we continue to manage through the current challenging operating environment," spokesman Jim Fisher said.

Although Ford spun off Visteon in 2000, it remains a major supplier for the Detroit automaker and also makes parts for other car companies. Like other suppliers, it has been struggling recently amid the collapse in new car sales as automakers idle factories and slash production.

Despite Visteon's woes, Ford's chief executive, Alan Mulally, has said the former parent would not come to Visteon's rescue in the event of a failure. In the past, Ford has taken over plants Visteon has been unable to sell, hired back workers and helped pay retiree benefits.

Ford's position on Visteon is in stark contrast to that of its crosstown rival General Motors Corp. GM has pumped billions into its spun-off parts supplier, Delphi Corp., since it filed for Chapter 11 bankruptcy protection in 2006. Delphi still has not emerged from Chapter 11.

In some ways Ford isn't as dependent on Visteon as GM is on Delphi, but automaker executives have repeatedly said a disruption in the supply -- meaning a bankruptcy -- could spell disaster for the entire industry. In a worst-case scenario, some fear that a supplier bankruptcy would cause a chain-reaction of failures across the industry, due to the interdependence among automakers, their suppliers and the companies that supply them.

Last month, Visteon said it lost $633 million in 2008, said it planned to cut 1,000 jobs by the end of March and warned it might not meet the terms of its debt agreements. The company already cut 14 percent of its salaried work force and nearly 30 percent of its hourly work force in 2008.

The New York Stock Exchange delisted shares of Visteon last week, citing low trading levels. The NYSE said Visteon had fallen below the exchange's standard for average global market capitalization and stockholders' equity of $75 million and average closing price of at least $1 over a consecutive 30 trading-day period.

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