Visteon shareholders object to plan based on flawed valuation

By Caroline Salls

Pittsburgh, April 23 - Visteon Corp. shareholders Aurelius Capital Master, Ltd., ACP Master, Ltd. and Aurelius Convergence Master, Ltd. objected to the disclosure statement for the company's proposed plan of reorganization, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

Although equity holders are not scheduled to receive a distribution under the plan, the Aurelius entities said "Visteon's enterprise value substantially exceeds the amount of its debt, leaving significant value for shareholders."

"The obvious flaws in the debtors' valuation have not escaped notice: In spite of the risks and uncertainties inherent in the bankruptcy process, Visteon's bank debt is currently trading at greater than par plus accrued [interest]," the shareholders said in the objection.

In addition, Aurelius said the company's bonds are trading above par, even though the plan only calls for a 19% to 22% recovery for unsecured creditors.

"This indicates the market's view that the stock to be distributed to the holders of the bank and bond debt as well as to management is worth far more than its purported plan value," the shareholders said.

Aurelius said "the root of the problem is that the plan is premised on unduly pessimistic financial projections that the debtors' management made over four month ago - at a time when the U.S. economy was in the midst of the worst downturn since the Great Depression, and company valuations in the auto and other sectors were correspondingly depressed."

The shareholders said Visteon's outlook has since improved and the valuations of comparable companies have rebounded.

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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