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Global Credit Research - 29 Mar 2011
Approximately $500 million of debt obligations rated
New York, March 29, 2011 -- Moody's Investors Service assigned a B2 rating to Visteon Corporation's
(Visteon) new $500 million senior unsecured note offering that
will be used to repay its existing senior secured term loan. In
related actions, Visteon's Corporate Family and Probability
of Default Ratings were affirmed at B1, and the company's
Speculative Grade Liquidity rating was affirmed at SGL-3.
The rating outlook is stable.
The following rating was assigned:
B2 (LGD4, 59%), for the $500 million guaranteed
senior unsecured note
The following ratings were affirmed:
Corporate Family Rating, B1;
Probability of Default, B1;
Ba1 (LGD2, 13%), for the $500 million senior
secured term loan - this rating will be withdrawn upon repayment;
SGL-3, Speculative Grade Liquidity Assessment
The $200MM asset based revolving credit facility is not rated by
The last rating action was on December 14, 2010 when the B1 Corporate
Family Rating was assigned.
Visteon's B1 Corporate Family Rating is supported by the company's
competitive market position in its automotive climate control and interiors
businesses which have enabled the company to achieve new business wins
of about $700 million through 2013. This new business should
further diversify the company's revenue base toward growing Asian
markets and away from the Detroit-3. Improving automotive
production trends in Asia (40% of revenues in 2010) and North America
(17%) in 2011 will help offset the impact of business divestitures
and plant closures executed in the second quarter of 2010. Visteon
also continues to benefit from the operational and financial restructurings
achieved upon its October 2010 emergence from bankruptcy. We expect
that Visteon's core competitive strengths and the benefits of the
restructurings will enable it to maintain EBIT margins in the range of
3% to 5%, a level that is supportive of a single-B
rating level. The ratings also reflect Moody's assessment of the
additional risks involved with the company's ability to access funds generated
by its foreign subsidiaries and joint ventures on a timely and cost effective
The stable rating outlook incorporates Moody's view that generally improving
automotive industry conditions, and Visteon's modestly leveraged
capital structure, will drive credit metrics supportive the assigned
rating in the event of potential temporary customer disruptions caused
by the recent earthquake in Japan.
Visteon is anticipated to continue to have an adequate liquidity profile
over the next twelve months supported by cash balances and a $200
million asset based revolving credit facility. Cash balances as
of December 31, 2010 were approximately $905 million,
excluding about $74 million of restricted cash. The company's
unrestricted cash is distributed about 45% in North America/Europe
with the remainder in Asia. On December 31, 2010 the asset
based revolver had no cash drawings with borrowing base availability of
$150 million. While modest in size, the facility is
expected to be largely undrawn over the near term. We continue
to expect Visteon to generate negative free cash flow over the near-term
after incremental capital expenditure requirements for new business growth.
Previously required nominal amortization will be eliminated with the bond
refinancing. The asset based revolving credit facility does not
have financial covenants. Alternate liquidity is limited by debt
incurrence covenants under the credit facilities.
The principal methodologies used in this rating were Global Automotive
Supplier Industry published in January 2009, and Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S.,
Canada and EMEA published in June 2009.
Visteon, headquartered in Van Buren Township, Michigan,
is a leading global automotive supplier that designs, engineers
and manufactures innovative climate, electronic, interior
and lighting products for vehicle manufacturers. The company has
facilities in 26 countries and employs approximately 26,500 people.
Revenues for the year ending December 31, 2010 were approximately
Information sources used to prepare the credit rating are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, confidential and proprietary Moody's Investors
Service information, and confidential and proprietary Moody's
Moody's Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purposes of maintaining
a credit rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a credit rating is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Investors Service's Credit Ratings were fully digitized
and accurate data may not be available. Consequently, Moody's
Investors Service provides a date that it believes is the most reliable
and accurate based on the information that is available to it.
Please see the ratings disclosure page on our website www.moodys.com
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Please see the Credit Policy page on Moodys.com for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
Timothy L. Harrod
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
J. Bruce Clark
Senior Vice President
Corporate Finance Group
Moody's Investors Service
Moody's Investors Service
Moody's assigns B2 rating to Visteon's new notes
250 Greenwich Street
New York, NY 10007
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