Visteon Corporation today has announced that the transaction with Ford Motor Company remains on schedule to close on or before Sept. 30, 2005, as contemplated by the memorandum of understanding (MOU) announced on May 25, 2005. Since announcing their MOU, Visteon and Ford have worked diligently to finalize the definitive agreements that will effectuate the transfer of approximately 24 North American facilities to a Ford managed entity. The parties have made significant progress toward signing definitive agreements, including resolving most of the significant transactional issues and receiving U.S. anti-trust and union approvals.
"We are very pleased with the progress we’ve made and we are working to complete the definitive agreements as quickly as possible." said Jim Palmer, Visteon executive vice president and chief financial officer. "Ford and Visteon have been working hard to define how Visteon will support the new entity, and have made significant progress. We still have some additional items that need to be resolved, and both parties are committed to resolving them.
"Visteon’s bank lines are in place to provide funds until definitive agreements are finalized. We are looking forward to completing the negotiations and turning our attention to the future of our core operations," said Palmer.
Visteon has also concluded, based on the probable successful outcome of its discussions with Ford, it is necessary to impair assets in both North America and Europe, which will result in a non-cash charge of approximately $US 1.1 billion in the second quarter 2005. In North America, charges of nearly $US 900 million will be recognized as the company reduces, to estimated fair value, the carrying value of assets related to the 24 facilities that will be transferred to Ford in conjunction with the pending transaction. In addition, Visteon will record a non-cash charge of approximately $US 250 million to reduce the carrying value of certain non-core fixed assets for drive line and engine air fuel systems primarily in Europe. Both of these charges will be recognized in Visteon’s cost of sales. Visteon had previously announced that it anticipated a second quarter, non-cash charge of approximately $1.3 billion related to the transaction with Ford. The amount to be recognized in the second quarter is lower due to higher than expected fair values for the assets to be transferred. The company still expects to recognize a significant gain related to the closing of the transaction with Ford well in excess of these second quarter charges.
Although a secured loan from Ford was not yet available due to the delay in finalizing the definitive agreements, Visteon recently drew on its revised bank lines to fund today’s maturity of its $250 million of 7.95 percent notes and to provide additional liquidity for working capital needs associated with summer shut down at its primary customers. Visteon expects to repay a portion of the amount drawn on the bank lines when it receives the $250 million short term loan from Ford upon reaching the definitive agreements.
Have your say: