Johnson Controls Inc (JCI.N) offered to pay $1.25 billion for most assets of bankrupt auto supplier Visteon Corp (VSTNQ.PK), a surprise bid that raised the stakes ahead of a key court hearing set for Monday.
Johnson Controls made the cash offer for Visteon's vehicle interior and auto electronics business in a letter sent May 7 after a round of initial contact in January. It went public with its offer on Friday.
Visteon, which has been operating in Chapter 11 for the past year, shot back that the proposed bid remained "highly conditional and vaguely defined" and risked distracting its own management from completing a reorganization in bankruptcy.
Milwaukee-based Johnson Controls said its offer was better for debt holders than Visteon's reorganization plan and would provide some value for its stockholders, who would otherwise be wiped out by bankruptcy.
"Our offer provides superior cash value and enables the stakeholders of the company to participate in the upside of the remaining Visteon business," Johnson Controls Chief Executive Stephen Roell said in a letter to Visteon CEO Donald Stebbins.
Shares in Visteon, traded on the pink sheets, rose 87 percent to $1.33. Shares in Johnson Controls, which is widely known as JCI, rose about 2 percent to close at $28.19.
Under Visteon's proposed reorganization, holders of $870 million of unsecured bonds would have the opportunity to buy $1.25 billion in stock in the reorganized company.
That money, along with $400 million in new debt, would be used to pay off the company's secured lenders in full.
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