Visteon will keep pension plans
|March 16, 2010||http://detnews.com/article/20100316/AUTO01/3160406|
Visteon will keep pension plans
Detroit News Washington Bureau
Washington — Visteon Corp. reversed itself and no longer wants to terminate its pension plans that cover about 23,000 employees and retirees, the company said in a court filing.
The Van Buren Township-based Visteon, the former Ford Motor Co. parts unit, said in December it wanted to transfer three of its pension plans to the Pension Benefit Guaranty Corp. The plan shaved an aggregate shortfall of $544 million. The retirees and employees would have lost more than $100 million in benefits because of federal limits on how much the agency insures.
But in a new plan filed late Monday, Visteon said it would retain its pension plans, "reflecting the company’s improved operating and financial performance, as well as recovering industry and market conditions."
PBGC had opposed the effort by Visteon to cancel its pensions.
"Visteon’s decision to keep its pension plans is a victory for its workers and retirees," said PBGC Acting Director Vince Snowbarger.
"We will continue our efforts to make sure that a reorganized Visteon emerges financially sound and with its defined benefit pension plans intact."
Visteon will have to make pension payments totaling $320 million through 2015 as a result of the decision to keep the pension plans.
Visteon said the new plan "has the express and unanimous support" of a committee of lenders, and the backing of lenders who hold 74 percent of the company’s debt.
Under the new plan, the lenders’ $1.63 billion claim will be converted to stock in the new company, which would leave the reorganized company virtually free of debt in the United States.
The secured lenders will receive 85 percent of the stock in the new company once it emerges from bankruptcy. Unsecured lenders will get 9 percent of new stock, about 20 percent of the value of their claims, while trade lenders will get cash worth 50 percent of their claims. But Visteon’s shareholders will be wiped out completely.
Visteon also proposes setting up to 10 percent of the company’s shares to use for a management incentive program.
Visteon intends to seek approval of its new plan April 13 in U.S. Bankruptcy Court in Delaware. If the disclosure statement is approved, the company will begin approval and seek final confirmation from the court.
Last year, a bankruptcy judge granted approval for Visteon to end health and life insurance benefits for about 6,500 current and future retirees — a move saving $31 million annually and $310 million in total. But the judge said 110 workers can keep the benefits because of a union contract.
Visteon came under harsh criticism when it proposed awarding up to $80 million in bonuses to executives at the same time it was slashing benefits to retirees. The company dropped that plan and saw a much smaller plan rejected in October.
In February, the bankruptcy court approved up to $35.4 million in bonuses for salaried workers and executives for 2010. The top 12 executives can get up to $5.9 million of the bonus pool.
Visteon, which was spun off by Ford in 2000, has been able to diversify. In 2000, 84 percent of its business came from Ford; today it’s just 29 percent — with Hyundai Motor accounting for 27 percent.