Visteon cleared to sell operations, get financing

WILMINGTON, Delaware (Reuters) - Visteon Corp (VSTNQ.PK), a bankrupt maker of auto parts, received court approval on Thursday for several deals that will help it restructure operations and secure financing.

The company received approval from a bankruptcy judge in Delaware for $150 million in financing to support its operations as it reorganizes under court protection.

The company filed for bankruptcy in May and has funded operations by using cash Visteon was holding as collateral for its borrowings. Ford Motor Co (F.N), Visteon's former parent and its biggest customer, funded Visteon's first month in Chapter 11.

"There is a foreseeable need for this DIP based on the debtor's cash forecast," said Marc Kieselstein, an attorney for Kirkland & Ellis, which represents Visteon.

The company's attorneys told the hearing Visteon will run out of cash in March without the debtor-in-possession, or DIP, financing.

The judge overruled objections from unsecured creditors, who said it was a "grab" of collateral and control of the bankruptcy by senior lenders in return for financing that was not needed at the moment.

"Here we have a company that is doing quite well, doing quite nicely in Chapter 11," said Robert Stark of Brown Rudnick, which is representing the court-appointed committee of unsecured creditors. "This is not an emergency situation. We call that a cosmetic DIP."

Van Buren, Michigan-based Visteon has suffered along with the rest of the automotive industry as car sales tumbled 40 percent due to a sharp rise in unemployment and lack of consumer credit.

Visteon, which reported 2008 sales of $9.54 billion, plans to close its weakest operations to help it emerge from bankruptcy.

The judge, Christopher Sontchi, approved agreements on Thursday with Chrysler and the U.S. unit of Nissan Motor Co Ltd (7201.T) that will allow Visteon to shed businesses without disrupting the supply of parts to automakers.

Chrysler, which is controlled by Italian automaker Fiat SpA (FIA.MI), will make payments of at least $31 million to Visteon. In return, Visteon will shift the manufacture of parts to other suppliers and transfer tools and intellectual property to Chrysler.

Visteon also received approval for a similar agreement to sell operations that supply Japanese automaker Nissan's North American operations. Visteon will receive $11 million for operations in Tennessee, Alabama and Mississippi that make car interiors. Visteon could receive more than $30 million in total if milestones are met.

Visteon struck a similar deal with General Motors Co GM.UL in September in which it shifted its supply of interiors and other parts operations to competitors in return for $22 million.

The case is In re Visteon Corp, U.S. Bankruptcy Court, District of Delaware, No. 09-11786

(Reporting by Tom Hals; editing by Andre Grenon)