Ailing auto parts supplier Visteon Corp. on Wednesday said it reached an agreement with former parent Ford Motor Co. that will slash its costs by unloading manufacturing plants and transferring 17,400 U.S. union workers back to Ford.
Shares of Visteon, which was spun off from Ford in 2000, jumped on the news.
Visteon said it would transfer some 20 plants in the United States and four in Mexico to a separate entity to be owned by Ford.
Visteon last September said it would need to restructure its ties to Ford and make other cuts to reverse steep losses, and in March both agreed to a temporary package of relief on wages, parts payments and capital spending.
Ford but still accounts for about 70 percent of Visteon’s revenue. Visteon leases workers from Ford to work at many of its plants. That arrangement, covering about 17,400 workers leased by Visteon from Ford for the plants will be returned to the automaker.
Ford will provide a secured $250 million loan to Visteon to refinance public notes due Aug. 1 and has agreed to reimburse up to $550 million of further Visteon restructuring costs. The loan will be repaid when the deal closes.
The non-binding memorandum is subject to approval by the United Auto Workers and regulators. A final agreement is expected to be signed by Aug. 1, with the transaction closing by the end of the third quarter, Visteon said.
The UAW on Tuesday said its leaders were recommending accepting the restructuring proposal and a vote has been scheduled to start on May 31.