By Liz White, UT staff
Southfield, Michigan-Lear Corp. announced 29 March that it has agreed to put the majority of its European Interior Products business into the joint venture it has with WL Ross & Co. llc.
The announcement was part of a package of measures designed to "strengthen the company's financial flexibility and reposition the company's operational focus," said a statement from Lear.
Lear's European Interior Products operations-consisting of nine plants generating about $750 million in annual sales-will be part of International Automotive Components Group (IAC), Lear's joint venture with WL Ross & Co. and Franklin Mutual Advisers llc.
IAC was formed last autumn to acquire the principal businesses of Collins & Aikman Corp. in Europe. In exchange for its European Interiors business, Lear said, it expects to get 34 percent of the JV's equity. The transaction is expected to close before 30 June 2006.
Combining the interior operations of Lear and Collins & Aikman in Europe forms the largest enterprise of its kind in the region, said Lear, providing a "solid platform for improving ongoing operating performance."
The deal is consistent with last autumn's agreement between Lear and Ross to explore strategic opportunities in automotive interior components, said Lear.
Other actions taken by the major automotive parts supplier include suspension of the company's dividend programme, and approval of bank commitments for $800 million in secured term loans.
"The senior leadership of Lear understands that near-term challenges within the automotive sector are weighing heavily on investors' minds," said Bob Rossiter, Lear's chairman and chief executive officer.
Refinancing Lear's 2007 debt early, gives investors confidences in the company finances, he indicated.