* Says may be required to file for bankruptcy
* Hires legal, financial advisers to review business
* Gets ‘going concern’ notice from auditors
* Lenders waive existing defaults through May 15
DETROIT, March 17 (Reuters) - Lear Corp (LEA.N), the auto parts supplier, said on Tuesday it may be required to file for bankruptcy protection despite winning an agreement with lenders that gives it until May 15 to restructure its debt-heavy balance sheet.
Lear also said it hired legal and financial advisers to help review its strategic alternatives and that its auditors have cast doubt on the supplier’s ability to survive as a “going concern.”
Lear said its lenders have agreed to waive the existing defaults under its primary credit facility through May 15 and that it remained in discussions with lenders to further modify its capital structure.
“A default under our primary credit facility could result in a cross-default or the acceleration of our payment obligations under other financing agreements,” Lear said in its annual report filed with the U.S. Securities and Exchanges Commission.
“In any such event, we may be required to seek reorganization under Chapter 11,” the company said.
Lear said it could not provide assurances regarding the length or severity of the current economic downturn or the company’s ability to restructure its capital structure.
Shares of Lear closed down 4 cents at 48 cents on the New York Stock Exchange.
Lear, which makes seating and electrical equipment for vehicles, has suffered because of steep production cuts by General Motors Corp (GM.N) and Ford Motor Co (F.N), which accounted for 42 percent of its global revenue in 2008.
U.S. auto sales fell nearly 40 percent in the first two months of 2007 to their lowest level in 27 years.
Suppliers get paid 45 to 60 days after delivering parts, and analysts have warned of a wave of failures in March and April, when the nearly total shutdown in U.S. auto production at the start of the year starts to hit their balance sheets hard.
In February, U.S. auto suppliers submitted a formal request to the U.S. Treasury for $18.5 billion in emergency funding, saying they have been shut off from credit at a time when payments from automakers are declining rapidly. (Reporting by Soyoung Kim; editing by Jeffrey Benkoe)