DETROIT -- Ford Motor Co. will add an additional $50 million to an escrow account established to reimburse some of the costs for Visteon Corp.s ongoing restructuring.
Fords contribution is in addition to an initial $400 million given by the automaker in 2005 to fund reimbursements for the suburban Detroit suppliers restructuring costs. The initial agreement required Ford to pay all of the first $250 million, with Visteon and the automaker matching the remaining $150 million.
As of June 30, Visteon had $97 million in the escrow account.
The $50 million addition to Visteons restructuring escrow fund was detailed in a Visteon Form 8-k filed Thursday with the U.S. Securities and Exchange Commission and was one of five amendments to a series of agreements between Ford, Visteon and Automotive Components Holdings LCC signed in 2005.
It was a practical and logical time to make additional assessments to update the agreements, said Jim Fisher, Visteon director of corporate communications. Were making the necessary updates to align with each companys business goals and needs.
Ford will now cover the next $50 million, without matching contributions from Visteon. After that, the supplier of interiors, climate control, electronics and lighting products will have to match Ford.
The amendments also noted that Ford will fund severance pay for salaried employees at Automotive Components Holdings on loan from Visteon, with no time limit or cost cap. An initial agreement had a $150 million cap, with Ford funding the first $50 million and Visteon matching Ford contributions for the remaining $100 million, and a deadline of Dec. 31, 2009.
The amendments also extended the time that Visteon would provide Automotive Components Holdings with information technology, human resources and other support services for a year and extended ACHs lease of 1,700 Visteon salaried employees through 2014.
The news comes amid an environment of increasing pressure on suppliers from falling vehicle sales and production in North America and rising raw material costs.
Fisher says the companys three-year restructuring plan announced in January 2006 in which the company planned to close, fix or sell 30 plants is on track, with the company addressing 27 of those 30 plants.
But he couldnt rule out additional restructuring, including plant closures beyond the initial 30.
Weve never put limits on the extent this restructuring would take to make this company viable, Fisher said, adding the company will be focusing on North America and Europe and that the company fully expects to continue restructuring its operations as needed.
Visteon has never posted an annual profit since being spun-off by Ford in 2000.
Visteon ranks No. 16 on the Automotive News list of the top 100 global suppliers with worldwide original-equipment automotive parts sales of $10.72 billion in 2007.