Lear on the brink of bankruptcy

Posted on Tuesday, June 30th, 2009 at 9:58 AM EDT.

Southfield, Mich.-based auto supplier Lear Corp. has until the end of the day Tuesday to make an interest payment to its bondholders and to reach a deal with its banks to stay out of bankruptcy, the Detroit News reported.

Lear, the world’s second-largest automotive seatmaker, is one of several suppliers that have run into financial trouble as auto sales plummeted, pushing it to the brink of a Chapter 11 filing, the paper said. More than a dozen auto suppliers have filed for bankruptcy reorganization in the United States this year, as they struggle to maintain the terms of their loan agreements amid falling revenues, the Free Press said.

Lear defaulted on its credit agreements last year when the company tapped a $1.2 billion credit line, and did not repay money owed on that credit line, the paper said. Since then, the company has negotiated two waivers with its banks and the latest one expires tomorrow. Also tomorrow, time will run out for Lear to make a $38 million interest payment to its bondholders, the story said. (Detroit Free Press)

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