UPDATE 4-American Axle gets 'going concern' notice

* Warning puts spotlight on supplier sector pressures

* Shares up 4 cents to 79 cents (Recasts adding Chrysler, paragraph 1; S&P ratings unchanged after notice; byline)

By David Bailey

DETROIT, March 13 (Reuters) - Auditors for American Axle & Manufacturing Holdings Inc (AXL.N) have warned that the problems at top customers General Motors Corp (GM.N) and Chrysler could force the parts maker out of business.

American Axle produces key parts -- axles and related components -- for a wide range of GM and Chrysler light trucks and SUVs. It generated about three-quarters of its $2.1 billion of sales last year from GM and about 10 percent from Chrysler.

American Axle joined GM in receiving a "going concern" notice from auditors with U.S. auto industry sales plunging to the lowest monthly levels in 27 years. GM and Chrysler, which is about 80 percent controlled by Cerberus Capital Management [CBS.UL], have taken $17.4 billion of government loans and are seeking more.

The parts maker was formed by an investor group in 1994 out of GM plants and supplies components mainly for pickup trucks and SUVs. A three-month strike at American Axle last year by the United Auto Workers led to broad GM plant shutdowns.

American Axle posted a staggering $112.1 million fourth-quarter net loss, blaming the weakness of the major automakers. It suspended its quarterly cash dividend and said it would continue to trim hourly and salaried labor costs.

"As a result of the current automotive industry environment and the uncertainty relating to the ability of GM and Chrysler to continue operating as going concerns ... it is uncertain whether we will be in compliance with the financial covenants ... throughout 2009," American Axle said in an SEC filing on Friday.

"Should (the company) fail to be in compliance with these covenants and we are unable to obtain a waiver or amend these covenants, we may be unable to continue as a going concern."

Standard & Poor's Ratings Services said on Friday the auditors' notice had no immediate impact on American Axle's ratings. The explanation for the warning was not a surprise, given the parts maker's reliance on GM and Chrysler, it said.

"We believe that bankruptcy risk remains high for those customers even with recent and possible future government funding," S&P said.

QUESTIONS ON LEAR, VISTEON

The notice highlights the increasing financial pressure across the U.S. supplier sector as extensive production cuts by automaker customers that began in the fourth quarter of last year cut deeply into revenue.

Another large supplier to GM, Lear Corp (LEA.N), has said it expects to receive a going concern notice from its auditors. Lear supplies seating and electronics to the auto industry.

Visteon Corp VSTN.PK, spun off by Ford Motor Co (F.N) in 2000, also warned in February that it was uncertain whether it would stay in compliance with debt covenants.

Chrysler, GM and Ford all have slashed North American production over the past five months to try to get inventory in line with demand.

GM and Chrysler have received $17.4 billion of emergency government loans and have asked for nearly $22 billion more. The government has until March 31 to determine whether Chrysler and GM can become viable and should receive more loans.

Two industry groups that represent U.S. auto parts makers submitted requests in February for emergency government loans to support the supply base and stop the crisis from deepening.

The groups proposed that the government guarantee U.S. automakers' payments to parts suppliers, accelerate payment terms or guarantee commercial loans to companies that make auto parts. They did not name companies that might need loans.

Grant Thornton, a corporate advisory and restructuring services firm with expertise in the sector, has estimated up to 40 percent of the U.S. auto parts suppliers are at financial risk due to the sharp production cuts in North America.

A $30 stock in mid-2007, American Axle's share price has fallen as low as 26 cents, which it reached on Monday.

The New York Stock Exchange warned American Axle last week that its stock might be delisted, a factor the company also cited as putting pressure on its ability to stay afloat. (Reporting by David Bailey; Additional reporting by Christopher Kaufman in New York; Editing by Derek Caney and Brian Moss, Gary Hill)