Visteon on path to divest auto interiors: latest sale to Cerberus

Visteon Corporation is divesting the majority of its global automotive interiors business to an affiliate of Cerberus Capital Management, in line with its strategy to focus on core growth businesses: thermal management and cockpit electronic ecosystems. The transaction, which is subject to regulatory reviews and other conditions, is expected to be completed by Dec. 31, 2014. This is its second transaction in a three-phase strategy to exit the automotive interiors business, with 90% of its interiors business now under contract, offer or sold.

Its first transaction, sale of its 50% ownership stake in a Korean automotive interiors joint venture, Duckyang Industry, to shareholders and associated parties for US$24 million as part of the divestiture of its interiors business is now completed.

The operations to be sold to the Cerberus affiliate had revenues of approximately US$1 billion in 2013 and produce a range of automotive interior products supplied to global vehicle manufacturers, including cockpit modules, instrument panels, door panels and floor consoles. These operations encompass 15 manufacturing plants, five just-in-time assembly plants and six engineering centres in Europe, Asia and South America. As part of this omnibus transaction, the Cerberus affiliate made an irrevocable offer to purchase the interiors business in France, and Visteon France will now begin consultation with employee representatives. In total, more than 4,000 manufacturing, engineering and administrative employees are part of the business involved in the transaction.

Under terms of the agreement with the Cerberus affiliate, Visteon will divest the interiors operations for nominal consideration and will contribute up to US$95 million to the business. The Cerberus affiliate will assume approximately US$20 million of pension and other liabilities of the business, while Visteon will retain ownership in certain real estate and other assets in South America and Europe worth, in aggregate, about US$35 million. Visteon also will provide support services to the Cerberus affiliate. Terms of this agreement are generally consistent with previously provided guidance on Visteon's exit of the interiors business.

Also, Visteon has agreed to provide a seller-backed revolver to bridge any shortfall of a targeted US$90 million of external credit facilities if the complete amount is not available by closing, to be repaid by the buyer, if drawn, once additional committed facilities are in place after the transaction closes. The US$90 million of financing is not anticipated to be utiliSed at closing and simply adds to the liquidity of the business. The amount of the potential Visteon-backed revolver, if any, is difficult to assess, but is not expected to exceed US$20 million once all external credit facilities are put in place.

"The transaction supports our previously announced intention to divest our interiors business and focus on our core thermal management and cockpit electronic ecosystems businesses, which enjoy market-leading positions in segments that are growing faster than the industry overall," said Timothy D. Leuliette, Visteon president/CEO. "We are pleased to be selling this interiors business to a well-capitalised, operationally focused investment firm with a track record for long-term value creation, where we think it will be an excellent fit."

(IMA)

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