Visteon wins court approval of bondholder equity commitment agreement

By Jennifer Lanning Drey

Portland, Ore., June 18 - Visteon Corp. received court approval to enter into an equity commitment agreement that is the centerpiece for the rights offering sub-plan included in Visteon's plan of reorganization with some of its bondholders, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, Visteon's plan of reorganization consists of two mutually exclusive sub-plans.

Under the rights offering sub-plan, some unsecured bondholders would have the opportunity to receive 95% of the equity in reorganized Visteon in exchange for $1.25 billion in cash raised through a backstopped equity rights offering, and the remaining 5% in equity would be distributed among unsecured bondholders.

Unsecured bondholders unable to participate in the rights offering under securities laws would also be provided with a cash recovery under the plan in lieu of receiving rights to participate in the rights offering.

Secured lenders would be paid in full with proceeds from the capital raise and exit financing.

Under a claims conversion sub-plan, which is similar to the plan filed on March 15, the term loan lenders would receive 85% of the equity in reorganized Visteon and unsecured bondholders would receive 15% of the equity.

Under both sub-plans, other general unsecured creditors would receive a cash payout and holders of Visteon's equity would receive no recovery.

Visteon said previously that if the bondholders deliver the $1.25 billion and exit financing, the company will move forward with the rights offering sub-plan.

However, if the bondholders are unable to raise this cash, the company said it will toggle to the claims conversion sub-plan.

Visteon also received court approval of the support agreements related to the plan.

Visteon, a Van Buren Township, Mich., global automotive supplier, filed for bankruptcy on May 28, 2009. Its Chapter 11 case number is 09-11786.

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