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Ford, Visteon Sign Memorandum of Understanding for New Business Arrangement
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Ford Motor Company announced it has signed a Memorandum of Understanding (MOU) with its largest supplier, Visteon Corp., that protects the Company's supply of critical parts and components, creates opportunities for production material cost savings, and improves its ability to benefit from competitively-priced and high-quality parts, systems and technologies.
The MOU proposes the transfer of 24 Visteon plants and facilities in the U.S. and Mexico and associated assets to a new, temporary business entity to be managed by Ford. Over time, Ford would prepare most of these transferred Visteon operations for sale to companies with the expertise and capital to supply Ford with parts, systems and technologies that are competitive in price and quality. In addition, once the transaction is closed, the agreement provides Ford with warrants to purchase up to 25 million shares of Visteon Corp. common stock at $6.90 per share, and continued annual price reductions from Visteon through 2008.
"This agreement brings us closer to a true 'arms length' relationship with our largest supplier," said Don Leclair, Ford's chief financial officer and executive vice president. "We've accomplished this while also creating opportunities to accelerate the improvement of our business results. Over time, this agreement will allow us to diversify our supply base and enhance our access to parts, systems and technologies that are competitive in price and quality. With the United Auto Workers' continued support, many of these Visteon operations will have the opportunity to prosper under new ownership."
The MOU with Visteon is subject to customary approvals and conditions, ratification by Ford-UAW hourly employees that would be affected by the proposed agreement, and negotiation by Ford and Visteon of a definitive agreement, which the parties are working to complete in the third quarter. The transaction is expected to be closed by September 30.
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May 26th, 2005
Source: Prnewswire.com |
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