Auto parts supplier Visteon Corp. said it made a major payment on outstanding bonds by a Tuesday deadline, avoiding a default that had threatened to send the company into bankruptcy protection.
A spokesman for the Van Buren Township, Michigan-based company said it made an interest payment of about $16 million on bonds set to mature in 2014. Some analysts had said Visteon _ the former parts arm of Ford Motor Co. _ would miss the payment and instead file for bankruptcy protection.
"Our bond interest payment was paid in full today, and we continue to manage through the current challenging operating environment," spokesman Jim Fisher said.
Although Ford spun off Visteon in 2000, it remains a major supplier for the Detroit automaker and also makes parts for other car companies. Like other suppliers, it has been struggling recently amid the collapse in new car sales as automakers idle factories and slash production.
Last month, Visteon said it lost $633 million in 2008, announced plans to cut 1,000 jobs by the end of March and warned it might not meet the terms of its debt agreements. The company had already cut 14 percent of its salaried work force and nearly 30 percent of its hourly work force in 2008.
The New York Stock Exchange delisted shares of Visteon last week, citing low trading levels.
Despite Visteon's woes, Ford's chief executive, Alan Mulally, has said the former parent would not come to Visteon's rescue in the event of a failure. In the past, Ford has taken over plants Visteon has been unable to sell, hired back workers and helped pay retiree benefits.
Ford's position on its former parts unit is in stark contrast to that of its crosstown rival General Motors Corp. GM has pumped billions into its spun-off parts supplier, Delphi Corp., since it filed for bankruptcy protection in 2006. Delphi still has not emerged from bankruptcy.
In some ways Ford isn't as dependent on Visteon as GM is on Delphi, but automaker executives have repeatedly said a disruption in the supply _ meaning a bankruptcy _ could spell disaster for the entire industry. In a worst-case scenario, some fear that a supplier bankruptcy would cause a cascade of failures across the industry due to the interdependence among automakers, their suppliers and the companies that supply them.
Auto suppliers have joined carmakers in petitioning the federal government for help. Suppliers alone have asked the Obama administration for up to $25.5 billion in a package that would include aid to speed up payments from GM and Chrysler LLC, government guarantees of longer-term payments owed by the Detroit Three and federal loans.
"Right now there is no (debtor-in-possession) financing available for them so it would really be left for either the government to step in or the customers to do it," said Tom Spillane, an attorney with the Detroit-based firm Foley & Lardner LLP who has advised parts suppliers. "I don't see the banks at this point jumping in to put more cash into the autos unless there was some government guarantee of it."
During a White House meeting Friday of the auto task force, members of Obama's cabinet were briefed on the status of the auto parts suppliers. Suppliers have exchanged information with the task force about the industry's plight.
AP Auto Writer Dan Strumpf contributed to this report from New York and Associated Press Writer Ken Thomas contributed from Washington.