Visteon Corp. said today that it expects its auditors to issue a going concern warning about the company because of industry conditions and the suppliers cash situation.
In a regulatory filing, the former Ford Motor Co. parts unit said the warning would cause it to default on some loan covenants.
If lenders were to call in the loans, Visteon might be forced to file for Chapter 11 bankruptcy protection.
Visteon said it is working with lenders to try to get a waiver on the loan covenants. But management could not guarantee that a waiver could be obtained.
A going-concern warning is given when auditors have substantial doubt about a companys ability to survive.
Visteon, which makes electronics, interiors and climate control systems, also said today that its regularly scheduled annual report could not be filed on time. Last month, Visteon announced a preliminary net loss in 2008 of $663 million on sales of $9.5 billion, compared with a net loss of $372 million on sales of $11.3 billion in 2007.
At the end of 2008, Visteon had $1.18 billion in cash and cash equivalents, and another $68 million in an escrowed restructuring account funded by Ford. Its unclear how much cash Visteon has now.
Visteon never has posted an annual profit since being spun off from Ford in 2000.
Analysts last week had expected Visteon to miss a $16 million bond payment, which could have pushed the company into a Chapter 11 filing. But Visteon made the payment in full.
Ford, which still accounted for 34 percent of Visteons global business in 2008, has cut its production several times over the past year -- including a 41.9 percent cut for North America during the first half of this year. Chrysler LLC is cutting production by 48 percent and General Motors is trimming it back 32 percent.
Also today, auto retailer Asbury Automotive Group said it, too, expected a going-concern warning. Seating and electronics supplier Lear Corp. said it also expects one. General Motors and supplier American Axle & Manufacturing Holdings Inc. have received such notices.