Lear shares plunge on Chapter 11 worries
NEW YORK — Shares of Lear Corp. tumbled for a third straight day Friday on worries that a Chapter 11 bankruptcy filing at the auto supplier was imminent.
In heavy morning trading, Lear shares plunged 14 cents, or 26 percent, to 40 cents. That came a day after Lear shares closed down 34 cents, or 39 percent, at 54 cents. Over the past 52 weeks, the company’s shares have traded between 27 cents and $18.31.
The Southfield, Mich.-based auto supplier, which makes vehicle seats and electrical components, faces a Tuesday deadline to make a $38 million interest payment or reach some kind of agreement with its lenders to restructure its debt.
The semiannual payment would service Lear’s 8.5 percent senior notes due 2013 and its 8.75 percent senior notes due 2016.
If Lear is unable to make the payment or come to an understanding with its lenders, it’s widely expected that the company will be forced to file for bankruptcy protection.
The Wall Street Journal, citing anonymous people, reported Friday that the company has been trying to negotiate a deal with lenders, but is prepared to file for bankruptcy protection and is negotiating to set up bankruptcy financing.
Mel Stephens, a spokesman for Lear, declined to comment on the prospect of a bankruptcy protection filing or on possible negotiations going on between the company and its creditors.
Like the automakers, suppliers have been hit hard by the steep drop in new vehicle demand both in the U.S. and abroad.
Lear, which posted $13.6 billion in sales for 2008, is a key supplier for both General Motors Corp. and Ford Motor Co. The pair represent the company’s two largest customers and account for a combined 40 percent of its sales.
The company is also heavily dependent on the slumping North American and European auto markets, with 36 percent of its sales coming from North America and 49 percent coming from Europe.
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