Auto-industry supplier Visteon has managed to avoid a collision with a bankruptcy filing.
The embattled company made a critical $16-million bond interest payment on Tuesday, avoiding default. The default probably would have led to a bankruptcy filing, according to Reuters, citing a company spokesman.
In late February, Visteon conceded that it could not assure that it would remain in compliance with the terms of its debt instruments. “Visteon continues to explore options to address future liquidity needs, including administrative reductions, delaying capital expenditures, curtailing, eliminating or disposing of substantial assets or operations, or undertaking other significant restructuring measures,” it said in an earnings release at the time.
“We continue to focus on managing through the current challenging operating environment,” spokesman Jim Fisher said on Tuesday.
On Monday, Fitch Ratings downgraded the Issuer Default Rating of Visteon to C from CC, “indicating that a default is imminent or inevitable.” The ratings have been removed from Rating Watch Negative, where they were placed on Dec. 11.
“The continuing decline in global automotive production is expected to result in continued negative cash flows at Visteon for at least the next year, further draining the company’s limited excess liquidity,” Fitch said in a report. “Visteon has virtually no access to external sources of new capital, and existing sources are constricting.”
It added that Visteon has a maturity of $207 million in senior unsecured notes in 2010, and the credit rating agency expects some form of default to occur, either a “coercive debt exchange” or a Chapter 11 filing. Last week, the company’s stock was removed from the New York Stock Exchange due to low trading levels. It now trades over-the-counter on the Pink Sheets.