DUSTIN WALSH

Mando still on the prowl for Visteon's stake of Halla

Dustin Walsh covers auto suppliers for Crain's Detroit Business, an affiliate of Automotive News.Dustin Walsh covers auto suppliers for Crain's Detroit Business, an affiliate of Automotive News.
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DETROIT -- South Korean supplier Mando Corp. is maintaining its pursuit of Visteon Corp.'s 70 percent stake in the Halla Climate Control Corp. joint venture.

Mando said in a public filing Monday that it would establish a Chinese holding company listed on the Hong Kong Stock Exchange as an attempt to buy out Visteon's stake in Halla, according to a Reuters report out of Seoul.

The clear reason for a holding company and a public listing is to gain public, and investor, support (meaning they want cash to afford the stake).

Halla Climate and the remainder of Visteon's climate control business are worth roughly $2.1 billion, according to an Aug. 30 JPMorgan Chase analyst note.

Mando, which generated revenue of $3.2 billion in 2011, would need backing to toss together a deal of this size. It has only $62 million in free cash flow, or 3 percent of the value of Visteon's climate business.

An affiliate of the Financial Times said Mando hired financial advisers Nomura Group and Deutche Bank to advise on Halla, although no offer has been made.

Mando, a large suppler to Hyundai Motor Co., is a subsidiary of the Halla Group, which lost the climate control business when it entered bankruptcy in 1997.

Speculators believe Mando wants to put Halla Group back together. Mando is reportedly run by a cousin of Hyundai Chairman Chung Ching Mong-koo.

Mando entered the picture quickly after Visteon failed in July to acquire the remaining 30 percent of Halla. The deal was nixed after South Korea's National Pension Service, which owned 8.1 percent of Halla, rejected the offer. Weeks later, Mando acquired NPS' stake.

After Mando's filing, JPMorgan raised its target price on Visteon on Aug. 30 to $50 from $35.

Visteon shares are up about 61 percent over the past 30 days, closing today at $46.09, fueled by speculation over the company split.

Also raising the stakes is New York investor Jeffrey Altman, who upped his Owl Creek Asset Management hedge fund's ownership in Visteon to 2.93 million shares or 5.57 percent of the company. The share purchase represents a 27 percent increase in its position in the company since March 30.

Owl Creek is now the largest shareholder in Visteon. It's unclear whether Owl made a move to capitalize on Visteon's increasing share value or to position itself for a big payday in the event of a deal.

You can reach Dustin Walsh at dwalsh@crain.com.

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