Visteon Corp., the former auto-parts unit of Ford Motor Co., made a $16 million interest payment on $453 million of bond debt, dampening speculation that a bankruptcy is imminent.
Todays interest payment was on 7 percent notes due March 10, 2014. Earlier, analysts had speculated that Visteon would miss that bond payment to conserve cash for a Chapter 11 bankruptcy filing.
Visteon spokesman Jim Fisher declined to comment on bankruptcy rumors. He said Visteon continues to cut costs to survive in a difficult market.
Visteon makes interest payments on the notes twice a year, according to a regulatory filing. Had the company missed todays payment, it would have triggered a 30-day grace period to make the payment before defaulting on the bonds.
Visteons financial strains have heightened as North American vehicle production has plunged 55 percent this year through March 7. The company saw revenue drop 43 percent in the fourth quarter compared with the year-earlier period. The supplier posted a $328 million net loss on revenue of $1.65 billion in the fourth quarter.
Visteon hasn't had an annual profit since it was spun off from Ford in 2000.
Credit lines tapped
At the end of 2008, the company had $1.2 billion in cash. But Visteon has tapped nearly all of its credit lines and had warned that it may breach debt terms.
In a report issued Monday, Fitch Ratings predicted that a Visteon default was imminent or inevitable, as negative cash flows stemming from car and truck production declines would drain the companys limited cash reserves.
But Visteon last week surprised salaried employees at its suburban Detroit headquarters by granting a 2 percent performance bonus to 2,700 of its 8,700 salaried employees worldwide.
As Automotive News first reported Monday, Visteon paid the bonus in recognition of quality improvement made in 2008.
Visteons liquidity will be strained in 2009 by continuing losses, restructuring costs, cash being held in overseas markets or joint ventures and the cash requirements to run its day-to-day operations, the Fitch report said.
A Fitch analyst was unavailable for immediate comment on Visteons payment today and the effect that payment might have on the companys credit rating.