Visteon auditors expected to doubt viability

A "going concern warning" is what American auditors write into an annual audited statement when they think the company may go out of business.

Visteon Corp said on Monday it expects its auditors to question its ability to continue as a going concern due to the U.S. auto industry downturn and the auto parts maker's cash position, Reuters reports.

The parts maker said that this warning could trigger a default under Visteon's principal U.S. senior secured credit facilities.

Visteon had been spun off by Ford Motor Co in 2000. Visteon warned in February that it was uncertain of staying in compliance with its debt covenants. The auto parts maker still relies on Ford for one-third of its annual revenue.

U.S. auto parts makers face increasing financial pressure due to sharp production cuts by automaker customers that started toward the end of 2008 and now weigh on revenue.

With U.S. auto sales running at the lowest monthly rates in 27 years, production is expected to remain at low levels at least through the first half of the year.

Visteon is not the first and likely not the last parts maker to receive a going concern warning. Auto parts maker Lear Corp expects a similar warning. On Friday, auditors for American Axle & Manufacturing Holdings Inc warned that the problems at top customers General Motors Corp and Chrysler threatened its ability to continue operating as a going concern. Asbury Automotive Group Inc posted a fourth-quarter net loss on Monday and said its auditors had raised doubt about its ability to continue as a going concern. GM has also received a going concern notice from auditors.

With corporate offices in Van Buren Township, Mich. (U.S.); Shanghai, China; and Kerpen, Germany; Visteon has facilities in 27 countries and employs approximately 33,500 people.

In related news, Scott Garberding, Chrysler's chief procurement officer said that a number of Chrysler LLC suppliers are at risk of financial collapse within "days if not weeks, Automotive News reports. The supplier liquidity problem at Chrysler is "becoming more significant by the day," Garberding said in an interview. "We've been having multiple instances arise each week for the last few weeks where we've had suppliers let us know they were out of cash."

Sig Huber, supplier relations chief, said: "The number of suppliers ranked high-risk has tripled since the end of December. We have roughly 45 suppliers in the high-risk category."