A US court in Wilmington, Delaware has granted automotive supplier Visteon (Van Buren Township, Michigan / USA; www.visteon.com) time until 14 June to redraw its reorganisation plan for exiting Chapter 11 bankruptcy proceedings – see Plasteurope.com of 05.05 2009. Visteon’s management must consider alternative plans put forward by shareholders and lenders. Swift resolution is all the more urgent in view of an unsolicited USD 1.25 bn takeover bid made on 20 May by Johnson Controls (JCI, Van Buren Township, Michigan / USA; www.johnsoncontrols.com) for Visteon’s interiors and electronics businesses. The two units had combined sales revenue of USD 4.1 bn in 2009, down from USD 6.1 bn in 2008.

Attorneys for shareholders and lenders claim that the alternative plans, although similar to that proposed by Visteon management, would be cheaper, in part because they would save transaction fees. Management’s plan would allow holders of USD 870m in unsecured bonds to buy shares worth USD 1.25m in the reorganised company. This intake, along with USD 400m in fresh debt, would be used to pay secured lenders. The shareholders want to replace some of the company’s debt with equity that they could acquire. In particular, they are concerned that management is undervaluing the company, and thus their stake in it.
The lenders have proposed a slightly different plan.

JCI, in turn, maintains that its plan, too, is superior to that of Visteon management. While it waits out the delay, the auto supplier has hinted that it might be prepared to increase its offer. In a statement announcing the bid, JCI chief executive Stephen A. Roell said taking over the Visteon assets would “significantly expand” his company’s auto interiors business, while at the same time providing “global scale and complementary products” to its auto electronics portfolio. “Visteon’s major customers and Chinese joint venture partner support the transaction,” Roell added.

At least publicly, Visteon is spurning the JCI bid, remarking that it “has surfaced very late” in the one-year bankruptcy proceedings and that a transaction of this size and scope could distract the company from completing the reorganization process. Management contends that the bid “continues to lack important information and remains highly conditional.” It adds that JCI, with which it has had “extensive and difficult experiences in prior transactions,” is a direct competitor that could benefit by introducing delay and complexity into the reorganization process.