By Chrissie Thompson, Automotive News
Detroit, Michigan - Chrysler Group will pay Visteon Corp., an auto parts maker which uses thermoplastic polyurethane powder in its interior instrument panels, at least $31.3 million as part of an agreement to shift some business away from the bankrupt supplier and give Visteon some new business, court documents say.
Under the agreement, Chrysler will buy equipment at Visteon's plants in Saltillo, Mexico, and Highland Park, Michigan, Visteon spokesman Jim Fisher said.
The Michigan plant makes cockpit modules, consoles and door trim for Chrysler vehicles. The factory in Mexico assembles and sequences cockpit modules and door trim. Chrysler business makes up a "vast majority" of the work at those factories, which are still operating, Fisher said.
Chrysler's payments to Visteon include compensation for already-completed parts and for tools used to make components in Chrysler vehicles, according to an agreement filed last week in US Bankruptcy Court. The carmaker will also pay Visteon every 15 days and cover Visteon's cost of winding down operations that make parts for Chrysler interiors. Visteon no longer views those operations as beneficial, the court documents say.
Under the agreement, the equipment Chrysler has bought may be sold to another supplier, who would presumably take over those factories, which Visteon leases. If Chrysler can't find a buyer by 31 March 2010, the carmaker will assume ownership of the equipment, Fisher said.
Visteon also will help Chrysler find new suppliers for the parts Visteon used to make for the automaker, Fisher said.
Chrysler, which accounted for less than 5 percent of Visteon's global revenue last year, will give new lighting contracts to Visteon as part of the agreement.
The carmaker will also transfer the contracts it had for Visteon climate components to Halla Climate Control's South Korean and Canadian operations. Visteon owns a majority of Halla, which was not a part of the bankruptcy.
Chrysler will get electronics it previously received from Visteon from Yanfeng Visteon Electronics in China, the documents say. Visteon owns half of the Chinese electronics company's parent in a joint-venture with Shanghai Industry Automotive Corp.
In making the agreement with Chrysler, Visteon wanted to improve its liquidity position and restructure to concentrate on its core businesses, the supplier says in the documents.
Bloomberg News earlier reported the court documents' contents.
Visteon, a former parts arm of Ford Motor Co, filed for bankruptcy in May after failing to make an annual profit since its spin off in 2000. As part of its restructuring, Visteon is trying to exit the North American interiors business.
The supplier has requested court approval of its agreement with Chrysler.
Last month, Visteon asked the court to approve its agreement with General Motors Co. that would give the supplier at least $30 million from GM by the end of this year. Visteon also has said it is negotiating wind-downs for its business with Ford Motor Co. and Nissan North America Inc.