08 July 2009 21:18 [Source: ICIS news]
HOUSTON (ICIS news)--Automotive industry buyers of polyurethane (PU) foam said on Wednesday that the bankruptcy filing of a large automotive parts supplier could hurt already weak foam demand.
Lear, a Michigan-based automotive supplier of seats and electronics, filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the Southern District of New York on 7 July and listed total assets of $1.27bn (€914m) and total liabilities of $4.54bn.
“Demand is so weak right now and this does not help the situation,” a PU foam buyer said.
The move had been expected from Lear, which recently missed an interest payment on its bond debt and revealed its intention to seek bankruptcy protection.
Auto parts suppliers have been hammered by the economic downturn as automakers cut production. The bankruptcy filings by General Motors (GM) and Chrysler and the idling of most of their factories seriously affected the auto supply sector, an industry source said.
“We are conducting business as usual,” Lear CEO Bob Rossiter said. “We intend to proceed on an expedited basis and expect to submit the plan to the bankruptcy court within 60 days.”
In a letter to suppliers, Lear assured suppliers that it was continuing operations.
“Lear’s subsidiaries outside the US and Canada are not part of the Chapter 11 filings,” the letter to suppliers said. “Equally important, we have ample cash on hand, $500m in new financing, and our operations globally are continuing without interruption.”
Lear representatives could not immediately be reached for comment.
Lear, which posted $13.6bn in sales for 2008, is a key supplier for both GM and Ford, which represent the Lear's two largest customers and account for a combined 40% of its sales, the company said.
($1 = €0.72)
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