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25.05.2005 – 13:46

Visteon Deutschland GmbH

Visteon, Ford Sign Memorandum of Understanding for New Business Arrangement

    Van Buren Township, Michigan (ots/PRNewswire)

    - Plan would streamline Visteon's North American operations, improve  Visteon's cost-competitiveness and balance its customer and geographic  footprint

    Visteon Corporation (NYSE: VC) has signed a memorandum of understanding  with Ford Motor Company that provides for significant structural changes to  Visteon's North American manufacturing operations. When finalized, the  transaction is expected to increase Visteon's competitiveness by streamlining  and improving the cost structure of its North American operations.

    (Logo: )

    "This is a milestone agreement which, upon completion, will create a  more competitive business structure for Visteon in the United States and  remove a number of structural barriers to the company's long-term sustainable  success," said Mike Johnston, Visteon's chairman-elect and chief executive  officer. "Visteon will have a more competitive North American structure, a  more balanced global customer portfolio and a healthy regional mix. We will  be able to accelerate our focus on products most valued by our customers and  be well-positioned for growth."

    Going forward, a smaller, leaner Visteon will focus its engineering and  capital resources on products that have been generating significant new  business with major vehicle manufacturers -- interiors, climate control and  electronics, including lighting. Visteon has significant global scale in  these products and intends to strengthen its position through a more focused  investment in capital, people and technology.

    "The completion of this transaction will be a significant step forward  for Visteon. We will now have the opportunity to appropriately size our  operations on a global basis," said Johnston. "This positions us to achieve  our vision of being a world-class automotive supplier. In every aspect of  our business, we're strengthening Visteon as a global competitor. However,  we will need to take significant additional restructuring actions over the  next several years to bring our vision to full fruition."

      Key aspects of the proposed agreement include:
      -  Transfer of manufacturing facilities and other locations listed
          below and certain associated assets, including machinery, equipment,
          tooling, inventory, purchase and supply contracts, and prepaid
          assets to a separate entity that will be acquired by Ford. Following
          the closing of the transaction, Visteon will not have any ownership
          of this new entity.
      -  Termination of the current leasing arrangements for approximately
          17,400 Ford-UAW employees.
      -  Relief of Visteon's remaining liability, including about US$1.5
          billion of previously deferred gains, related to Ford-UAW
          post-retirement health care and life insurance benefit obligations
          (OPEB) for former assigned employees and retirees and certain
          salaried retirees, totaling about US$2 billion.
      -  Transfer of all assets in the Visteon Corporation UAW Voluntary
          Employee Beneficiary Association (VEBA) to the Ford-UAW VEBA.
      -  Ford would agree to reimburse up to US$550 million of further
          restructuring actions by Visteon.
      -  Payment of transferred inventory based on net book value at the time
          of closing.
      -  Upon the signing of the definitive agreement, Ford will provide a
          secured loan of US$250 million to refinance Visteon's public notes
          due August, 1, 2005. Visteon will repay the loan when the transaction
          is closed.
      -  Visteon will issue to Ford warrants to purchase 25 million shares of
          Visteon stock at an exercise price of US$6.90 per share.

    Under the proposed arrangement, Visteon will also provide transition  services, such as information technology, human resources and accounting  support to facilitate the operations of the Ford-managed legal entity.  These services will be available to the Ford-managed legal entity at cost  for up to 39 months after closing the transaction, and for a period  thereafter at an agreed upon mark-up. In addition, certain salaried and  hourly employees will be leased from Visteon and will be directly assigned  to support the operations of the Ford-managed legal entity. These resources  will be leased at cost from Visteon until transitioned to a subsequent buyer.

    The non-binding memorandum of understanding is subject to certain customary conditions, regulatory approvals and the ratification of the  affected Ford-UAW members assigned to Visteon. Visteon and Ford expect to  sign a definitive agreement on or before August 1, 2005 and close the  transaction by the end of the third quarter of 2005.

    Transferred Plants and Facilities

    At closing, Visteon will transfer the following plants and facilities,  in alphabetical order by location:

      Plant / Facility                        Location                 Primary Operation
      Bellevue                                Bellevue, Ohio            Service Parts
      Autovidrio                         Chihuahua, Mexico          Glass
      El Jarudo                          Chihuahua, Mexico          Powertrain
      Chesterfield                 Chesterfield, Michigan        Interior
      Commerce Park South          Dearborn, Michigan         Engineering/Support
      Glass Labs                         Dearborn, Michigan         Glass
      Product Assurance Center  Dearborn, Michigan         Engineering
      Visteon Technical
        Center Product                 Dearborn, Michigan         Engineering/Support
      Indianapolis                  Indianapolis, Indiana        Chassis
      Kansas City VRAP            Kansas City, Missouri        Interior
      Carlite Automotive            Lebanon, Tennessee         Glass
      Milan                                    Milan, Michigan          Powertrain / Exterior
      Monroe                                 Monroe, Michigan          Chassis
      Nashville                        Nashville, Tennessee         Glass
      Lamosa I, II, III          Nuevo Laredo, Mexico         Chassis / Powertrain
      Vitro Flex                         Nuevo Leon, Mexico         Glass
      Sheldon Road                      Plymouth, Michigan         Climate Control
      Saline                                 Saline, Michigan          Interior
      Sandusky                                Sandusky, Ohio            Powertrain / Exterior
      Sterling                    Sterling Heights, Michigan    Chassis
      Tulsa                                  Tulsa, Oklahoma            Glass
      Utica                                  Utica, Michigan            Interior / Exterior
      Rawsonville                      Ypsilanti, Michigan         Powertrain
      Ypsilanti                         Ypsilanti, Michigan         Powertrain

    A Leaner, More Competitive Visteon

    The agreement will reshape Visteon from a company that had US$18.7 billion in revenue in 2004 to a leaner, more competitive US$11.4 billion organization, based on estimated 2005 pro forma revenue.

    "Visteon is extremely well-positioned around the world, with strong  systems and engineering expertise and manufacturing capabilities serving our  customers on a 24 / 7 schedule," Johnston said. "This agreement begins to  place our North American structural issues behind us and we are preparing to  restructure to be a more efficient, productive and competitive Tier I  supplier."

    Upon completion of the transactions, Visteon will have a more balanced  regional sales mix. Based on 2005 estimated pro forma revenue, regions  outside North America would represent about 60 percent of Visteon's total  sales -- up from 30 percent in 2004. Global revenue would be more equally  distributed between North America and Europe with Asia Pacific accounting  for the remaining 20 percent of sales. Including unconsolidated sales from  joint ventures in the Asia Pacific region, Visteon's geographic sales mix  would become more balanced across all regions.

    Visteon's customer portfolio would also gain balance as sales to customers other than Ford would increase to nearly 50 percent of the company's total global revenue, up from the 2004 level of 30 percent.

    "Through the proposed Ford agreement and additional restructuring activities that will need to be implemented, Visteon has defined a path to  profitability that builds on its previous operational improvements and  restructuring actions", said Jim Palmer, executive vice president and chief  financial officer. "While this agreement places the company on track for  sustainable long-term success, we will continue efforts to improve our  operational and financial performance," he said.

    The completion of the transaction contemplated by the memorandum of  understanding with Ford will allow Visteon to strengthen its global  competitive position in interiors, climate, electronics and lighting. On a  limited basis in Europe, Visteon will continue to serve customers in certain  chassis and powertrain products lines. Visteon's Aftermarket operations in  North America and Europe will continue to offer mobile electronics and  underhood parts. The transfer of operations to the new entity will remove  glass products from Visteon's aftermarket product portfolio.

    Visteon expects that the transaction will result in a net gain in the  range of about US$450 -- US$650 million depending upon the actual amount of  assets transferred. It is expected that Visteon would recognize a non-cash  charge of approximately US$1.3 billion in the second quarter offset by the  gains primarily associated with the relief of liabilities associated with  the transaction upon closing of the transaction at the end of the third  quarter.

    Cash and Liquidity

    Visteon and Ford also amended their March 10 Funding Agreement to further  change the payment terms for certain components supplied by Visteon in the  United States and received from and after June 1, 2005 to an average 18 days  through July 31, 2005, then 22 days from August 1, 2005 to December 31, 2005.  If the transaction is completed, payment terms would continue at 22 days  through December 31, 2006. Payment terms would be 26 days in 2007. Effective  January 1, 2008, the payment terms would be increased to 34.5 days and effective Jan. 1, 2009, normal payment terms would apply.

    On Friday, May 20, 2005, Visteon received amendments from its lenders  under its major credit facilities that will permit it to delay delivery of  its first quarter 2005 financials until July 29, 2005. Further, Visteon is  currently in discussions with its global credit line banks regarding its  financing alternatives, including the renewal or replacement of its 364 day  facility.

    Conference Call Scheduled at 11 a.m. EDT Today

    Mike Johnston and Jim Palmer, executive vice president and chief financial officer, will host a conference call today, Wednesday, May 25 at  11 a.m. EDT to review today's announcement. To participate in the call,  callers in the U.S. should dial +1-888-452-7086 and callers outside of the  U.S. should dial +1-706-643-3752. Please call approximately 10 minutes  before the start of the conference. For a replay of the conference, those in  the U.S. should dial +1-800-642-1687; outside the U.S., callers should dial +1-706-645-9291. The pass code to access the replay is 6636927 (domestic and  international). The replay will be available until June 2, 2005.

    The conference call, along with the press release, presentation material  and other supplemental information, can be accessed through the investor  relations section of Visteon's web site at .

    Visteon Corporation is a leading full-service supplier that delivers  consumer-driven technology solutions to automotive manufacturers worldwide  and through multiple channels including the global automotive aftermarket.    Visteon has about 70,000 employees and a global delivery system of more  than 200 technical, manufacturing, sales and service facilities located in  24 countries.

    This press release contains "forward-looking statements" within the  meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various factors, risks and uncertainties that could cause our actual results to differ materially  from those expressed in these forward-looking statements, including the  automotive vehicle production volumes and schedules of our customers, and  in particular Ford's North American vehicle production volumes; our  ability to enter into definitive agreements that reflect the terms of the  Memorandum of Understanding with Ford and close the transactions that are  contemplated in the Memorandum of Understanding; implementing structural  changes that result from the closing of the transactions contemplated by  the Memorandum of Understanding in order to achieve a competitive and  sustained business; our ability to satisfy our future capital and liquidity requirements and comply with the terms of our credit agreements; the results of the investigation being conducted by Visteon's Audit Committee;  the financial distress of our suppliers; our successful execution of  internal performance plans and other cost-reduction and productivity  efforts; charges resulting from restructurings, employee reductions,  acquisitions or dispositions; our ability to offset or recover significant  material surcharges; the effect of pension and other  post-employment  benefit obligations; as well as those factors identified in our filings  with the SEC (including our Annual Report on Form 10-K for the year-ended  December 31, 2004). We assume no obligation to update these forward-looking  statements.

    Web site:

ots Originaltext: Visteon Corporation
Im Internet recherchierbar:

Kim Welch, +1-734-710-5593,, or Jim Fisher,
+1-734-710-5557,, both of Visteon Corporation;
NOTE TO EDITORS:  Visteon news releases, photographs and product
specification details are available at;  
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