By Tom Hals
WILMINGTON, Del., March 10 (Reuters) - Hedge funds that own about 7 percent of the stock of Visteon Corp want to meet with the bankrupt auto parts maker's board this week to discuss an alternative reorganization, according to a regulatory filing.
The hedge funds said in a letter dated March 8 that they have formed an ad hoc committee and want to discuss Visteon's improving performance no later than Friday.
The letter cited cash holdings and operating cash flow that exceeded forecasts in the company's disclosure statement, which it must provide to creditors who will vote on the company's proposed plan of reorganization.
'Given current trading prices of the company's debt and equity securities, which have increased sharply since February 26th, it appears that our clients are not the only ones who view your proposed disclosure statement's bearish financial projections used to justify a low valuation of the company with an understandable dose of skepticism,' said the letter.
'As such, there is no meritorious basis for the company to exclude its shareholders from significant distributions under a revised Chapter 11 plan.'
The ad hoc committee consists of funds associated with Davidson Kempner Partners, Plainfield Asset Management and Brigade Capital Management. The group said the parties may also own other Visteon securities.
The ad hoc committee said in a regulatory filing they paid a combined $4.77 million for their 9.5 million shares, or an average of 50.2 cents per share.
Visteon shares have rallied from around 1.3 cents in December to more than $1 last week. The shares rose 7.7 percent on Wednesday to 83.5 cents in pink sheets trade.
The company's bonds and loans have risen as well. The company's 7 percent notes due in 2014 rose 1.25 cents on the dollar on Wednesday to 87 cents, to yield more than 11 percent, versus as low as 44.5 cents in early February, when yields climbed above 32 percent, according to MarketAxess data.
The company filed for bankruptcy in May, when the U.S. automotive industry was roiled by the bankruptcies of General Motors and Chrysler.
Visteon, a former unit of Ford Motor Co, has been relatively aggressive in overhauling its operations as well as its balance sheet and has closed factories and proposed severing benefits for thousands of retirees.
The company's reorganization plan would give secured lenders nearly all of the company's equity as well as new secured debt. Unsecured creditors, except for the government's agency that guarantees pensions, would be wiped out, as would shareholders.
The company entered talks with unsecured creditors earlier this year over developing an alternative plan that would provide them some recovery.
Martin Bienenstock, an attorney with Dewey & LeBoeuf, which is representing the ad hoc committee, declined to comment.
An attorney for the company could not be immediately reached for comment.
The case is In re Visteon Corp, U.S. Bankruptcy Court, District of Delaware, No. 09-11786.
(Reporting by Tom Hals; Additional reporting by Walden Siew in New York; Editing by Tim Dobbyn) Keywords: VISTEON/ (thomas.hals@thomsonreuters.com; 1-302-993-6283; Reuters Messaging thomas.hals.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
WILMINGTON, Del., March 10 (Reuters) - Hedge funds that own about 7 percent of the stock of Visteon Corp want to meet with the bankrupt auto parts maker's board this week to discuss an alternative reorganization, according to a regulatory filing.
The hedge funds said in a letter dated March 8 that they have formed an ad hoc committee and want to discuss Visteon's improving performance no later than Friday.
The letter cited cash holdings and operating cash flow that exceeded forecasts in the company's disclosure statement, which it must provide to creditors who will vote on the company's proposed plan of reorganization.
'Given current trading prices of the company's debt and equity securities, which have increased sharply since February 26th, it appears that our clients are not the only ones who view your proposed disclosure statement's bearish financial projections used to justify a low valuation of the company with an understandable dose of skepticism,' said the letter.
'As such, there is no meritorious basis for the company to exclude its shareholders from significant distributions under a revised Chapter 11 plan.'
The ad hoc committee consists of funds associated with Davidson Kempner Partners, Plainfield Asset Management and Brigade Capital Management. The group said the parties may also own other Visteon securities.
The ad hoc committee said in a regulatory filing they paid a combined $4.77 million for their 9.5 million shares, or an average of 50.2 cents per share.
Visteon shares have rallied from around 1.3 cents in December to more than $1 last week. The shares rose 7.7 percent on Wednesday to 83.5 cents in pink sheets trade.
The company's bonds and loans have risen as well. The company's 7 percent notes due in 2014 rose 1.25 cents on the dollar on Wednesday to 87 cents, to yield more than 11 percent, versus as low as 44.5 cents in early February, when yields climbed above 32 percent, according to MarketAxess data.
The company filed for bankruptcy in May, when the U.S. automotive industry was roiled by the bankruptcies of General Motors and Chrysler.
Visteon, a former unit of Ford Motor Co, has been relatively aggressive in overhauling its operations as well as its balance sheet and has closed factories and proposed severing benefits for thousands of retirees.
The company's reorganization plan would give secured lenders nearly all of the company's equity as well as new secured debt. Unsecured creditors, except for the government's agency that guarantees pensions, would be wiped out, as would shareholders.
The company entered talks with unsecured creditors earlier this year over developing an alternative plan that would provide them some recovery.
Martin Bienenstock, an attorney with Dewey & LeBoeuf, which is representing the ad hoc committee, declined to comment.
An attorney for the company could not be immediately reached for comment.
The case is In re Visteon Corp, U.S. Bankruptcy Court, District of Delaware, No. 09-11786.
(Reporting by Tom Hals; Additional reporting by Walden Siew in New York; Editing by Tim Dobbyn) Keywords: VISTEON/ (thomas.hals@thomsonreuters.com; 1-302-993-6283; Reuters Messaging thomas.hals.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
