Visteon gets court approval of Honda customer accommodation agreement

By Caroline Salls

Pittsburgh, Dec. 10 - Visteon Corp. obtained court approval to enter into a customer accommodation agreement with Honda of America Mfg. Inc., according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

The agreement calls for the re-sourcing and transitioning of some lines of Honda business and the sale of inventory, equipment and tooling related to those lines of business.

Visteon said it will close its Highland Park, Mich., facility under its strategic business plan. The company said it produces Honda component parts at the facility.

Because the production of Honda component pars comprises only a small percentage of overall production at the Highland Park facility, Honda has agreed to re-source the component parts produced by Visteon to allow Visteon flexibility to perform under the terms of its accommodation agreement with Chrysler.

Under the Honda agreement:

• Honda will make a $3.7 million payment to Visteon to cover all reconciled amounts owed on delivery of Honda component parts produced at the facility;

• Honda will pay all accounts payable arising from deliveries of component parts on accelerated net-15-day payment terms;

• Honda will pay for all inventory specifically related to the production of re-sourced component parts at 100% of Visteon's actual and documented costs for raw materials and 100% of the purchase order price for finished goods;

• Honda will make a $155,000 surcharge payment to Visteon;

• Honda will make a $751,000 payment to Visteon for costs associated with the wind-down of component parts production at the facility; and

• Honda will make a $2 million payment to Visteon for the purchase of equipment dedicated exclusively to the manufacturing of component parts.

In exchange, Visteon will continue to produce Honda component parts during the term of the agreement and will help Honda re-source the production to other suppliers.

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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