Visteon, creditors considering alternative toggle reorganization plan

By Caroline Salls

Pittsburgh, April 14 - Visteon Corp. said it has been "seriously exploring" a toggle plan that would eliminate uncertainty associated with a rights offering-based plan and avoid costly litigation, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

After filing a plan on March 15, Visteon said it has continued to respond to diligence requests of its bondholders and official committee of unsecured creditors to facilitate their formulation of an alternative plan structure that is premised on a rights offering backstopped by some of the bondholders.

While discussions with those bondholders have intensified, the company said "the prospect that the rights offering might falter either as a result of the backstop parties' failure to raise the cash or by an assertion of a breach by the debtors, thereby relegating the debtors back to square one, was not acceptable."

Under the proposed toggle plan, if the company's bondholders deliver a promised cash infusion through direct subscription to the rights offering, the exercise of a backstop or a combination of the two, then Visteon will move forward with the bondholders' rights offering structure.

The company said this would allow it to cash out its term loan lenders by paying full principal and pre-bankruptcy and post-bankruptcy interest.

However, if the bondholders do not deliver the promised cash, Visteon said it would move forward with a debt-for-equity plan similar to one filed on March 15, with the support of the bondholders already secured.

Visteon said it is negotiating commitments with the holders of the required amount of term loan and bondholder claims for the toggle plan.

In addition, the company said other variations of the toggle are being developed, which would provide a similar economic opportunity to bondholders.

To allow time for further negotiations on the possible toggle plan, the company said it has postponed the hearing on approval of its disclosure statement to April 30, and its official committee of unsecured creditors has agreed to delay a hearing on its exclusivity termination motion.

Although it hopes to proceed with a new disclosure statement on April 30, the company said it still believes the plan filed on March 15 is confirmable, and it "will not hesitate to move forward with the March 15 plan or a variant thereof in accordance with [its] fiduciary duties if the toggle plan negotiations stall."

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

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.