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7 years ago
UPDATE 1-Visteon's new plan offers recovery to bondholders
March 16, 2010 / 3:53 AM / 7 years ago

UPDATE 1-Visteon's new plan offers recovery to bondholders

3 Min Read

* Proposal provides recovery to bondholders

* Plan still gives secured lenders control of company

* Pensions to be retained; shareholders wiped out

By Tom Hals

WILMINGTON, Del., March 15 (Reuters) - Autoparts maker Visteon Corp VSTNQ.PK unveiled an amended bankruptcy plan on Monday that proposed a recovery for bondholders but not for shareholders, who started a campaign last week for a payout. [ID:nN10133754]

The amended plan converts the company's $1.629 billion secured debt to 85 percent of the company's equity. Holders of Visteon's 12.25 percent senior notes would receive 6 percent of the company's equity and the remaining equity would be distributed among holders of other unsecured notes and non-trade claims.

Trade creditors would receive $23.9 million, which the company said represented a 50-percent recovery.

The company said the plan reflected "the company's improved operating and financial performance, as well as recovering industry and market conditions." That allowed for distributions to creditors and was "a significant improvement" over its original proposal filed late last year.

The original plan proposed converting secured lender claims into nearly all of the company's equity and giving those lenders new debt. Under that plan, most unsecured creditors would have been wiped out.

Unsecured creditors opposed the original plan and began discussions with the company about an alternative proposal.

The company said the unsecured creditors' advisers had spent four weeks at the company's headquarters in Van Buren Township, Michigan, discussing an alternative plan. It said those talks would continue.

The new plan also proposed retaining the company's defined benefit pension plans. The company previously proposed severing benefits for thousands of retirees.

The former unit of Ford Motor Co (F.N) has been aggressively overhauling its operations as well as addressing balance sheet problems. Its improved performance has caught the attention of investors who have bid up its bonds and even its shares, which rose from less than 2 cents per share in December to more than a $1 per share this month.

Last week, hedge funds that own about 7 percent of Visteon's shares asked to meet with the board to discuss a plan of reorganization that would provide them with a recovery. Shareholders have the lowest priority claim on a bankrupt company.

The case is In re Visteon Corp, U.S. Bankruptcy Court, District of Delaware, No. 09-11786. (Editing by Valerie Lee)

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