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Rating Action:

Moody's assigns ratings to reorganized Visteon, Corporate Family Rating at B1

14 Dec 2010

Approximately $500 million of rated debt obligations affected

New York, December 14, 2010 -- Moody's Investors Service assigned initial ratings to reorganized Visteon Corporation (Visteon) -- Corporate Family and Probability of Default Ratings, at B1. In a related action Moody's also assigned a Ba1 rating to Visteon's senior secured term loan, and a Speculative Grade Rating Assessment of SGL-3. The rating outlook is stable.

The following ratings were assigned:

Visteon Corporation:

Corporate Family Rating, B1;

Probability of Default, B1;

Ba1 (LGD2, 13%), for the $500 million senior secured term loan

SGL-3, Speculative Grade Rating Assessment

The $200MM asset based revolving credit facility is not rated by Moody's.

RATINGS RATIONALE

The B1 Corporate Family Rating considers the benefits of the company's operational and financial restructuring under Chapter 11 of the U.S. Bankruptcy Code, and an expectation that Visteon's more modest debt burden following emergence can be adequately supported by earnings and cash flow growth by the business. Through its reorganization Visteon reduced funded debt by $2 billion to approximately $618 million resulting in significantly lower debt service costs. Visteon's performance is expected to benefit from plant closures and cost reduction actions taken prior to and during Chapter 11. Moody's estimates the company's EBIT margins improved for the first three quarters of 2010, averaging about 3.8% (including Moody's standard adjustments); compared to a negative average EBIT margin for the first three quarters of 2009. While a significant improvement that is expected to support EBIT/interest above 2.0x over the near-term, the company's EBIT margins are expected to remain in the B sub-factor rating range (3-5%). The ratings also incorporate Moody's consideration for 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 basis.

Moody's believes that Visteon will continue to maintain its position as a key supplier to major OEMs. Over the recent years, the company reduced its customer concentrations to Ford to about 26%, well below historical levels. In addition, the company has improved its regional diversity with North America representing about 18% of sales and Asia/Pacific regions representing about 39% of sales. Moody's believes Visteon's competitive market position in its automotive climate control, and interiors businesses has been preserved through the Chapter 11 process and the company's financial profile will support business growth in the future.

The stable rating outlook incorporates Moody's view that generally improving automotive industry conditions combined with Visteon's less levered capital structure will drive credit metrics supportive of the assigned rating over the near-term.

Visteon is expected to have an adequate liquidity profile over the next twelve month supported by cash balances and a $200 million asset based revolving credit facility. Upon emergence from Chapter 11 on October 1, 2010, Visteon had cash balances of approximately $956 million, including about $90 million of restricted cash. The company's unrestricted cash is distributed roughly evenly between North America/Europe and Asia. On October 1, 2010 the asset based revolver had no cash drawings. Under the borrowing base calculation, about $170 million was available for cash drawings as of that date. While modest in size, the facility is expected to be largely undrawn over the near term. Visteon is not anticipated to generate free cash flow over the near-term after incremental capital expenditure requirements for new business growth. The new capital structure also benefits from nominal amortization requirements over the next twelve months Financial covenants under the senior secured term loan are a net leverage ratio test and a minimum interest coverage test. The asset based revolving credit will 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 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 LTM period ending September 30, 2010 approximate $6.7 billion.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.

Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of assigning a credit rating.

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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 for further information.

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New York
Timothy L. Harrod
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Michael J. Mulvaney
MD - Corporate Finance
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's assigns ratings to reorganized Visteon, Corporate Family Rating at B1
No Related Data.
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