NEW YORK -- Standard & Poor's on Monday said it may cut Lear Corp.'s debt ratings to junk status, citing the company's plan to incur a charge of up to $250 million to restructure.
Ratings cuts, particularly from investment grade to junk status, tend to raise a company's borrowing costs.
The auto parts maker said earlier on Monday it plans to cut up to 7,700 jobs and revise its financial forecasts as it begins a global restructuring.
S&P currently rates the company's corporate credit and senior unsecured debt at "BBB-minus," the lowest investment-grade rating.
S&P said most of the $250 million pretax charge would be incurred this year and 80 percent of it would be funded with cash.
Prior to the charge, S&P said it was already concerned about Lear's weakened financial performance due to lower production levels by its two biggest customers: Ford Motor Co. and General Motors.
S&P said Lear has ample liquidity given a recently renewed credit facility and cash reserves as of early April.