US car seat maker files for bankruptcy

Bloomberg

The U.S. company listed debt of $4.5 billion and assets of $1.3 billion as of May 30 in Chapter 11 documents filed yesterday in U.S. Bankruptcy Court in the Southern District of New York.

The manufacturer is seeking bankruptcy protection after low auto production globally by customers such as bankrupt General Motors cut into sales. More than 20 partsmakers have filed for protection from creditors this year, according to the Original Equipment Suppliers Association trade group.

Lear reached an agreement in principle with a steering committee of secured lenders to restructure debt in Chapter 11 bankruptcy after posting $1.05 billion in net losses in the past three quarters, the company said July 1. A group led by JPMorgan Chase and Citigroup will provide $500 million in debtor-in-possession financing that would be convertible into an exit line, the statement said.

Lear did not make payments due June 30 of $7.15 million under its senior credit facility, it said in a regulatory filing Monday. Nor did Lear make interest payments due June 1 of $38.4 million on 8.5 percent senior notes due in 2013 and 8.75 percent senior notes maturing in 2016, the filing said.

The Southfield, Michigan-based supplier is in default on these payments and is not in compliance with certain provisions of its senior credit facility, the filing said.

In the restructuring plan, bondholders would get 46 percent of new common stock in Lear with warrants to purchase 15 percent more, the filing said. Lear forecast sales of $9.07 billion this year, a 33 percent decline from 2008, and $11.4 billion in 2010.