Lear cuts dividend, gets $800 million in loans

/ Source: The Associated Press

Auto parts supplier Lear Corp. said Wednesday that it has obtained $800 million in bank loans, suspended its dividend and sold an interior products division in an effort to strengthen its financial position.

Lear shares rose $2.33, or 13.8 percent, to $19.28 in morning trading on the New York Stock Exchange. They have been trading near the lower end of their 52-week range of $15.60 to $45.15.

Lear supplies electronics, seating, flooring and other products to automakers, including General Motors Corp., Toyota Motor Corp. and BMW AG.

“Investors can be assured that the company is financially sound and focused on improving our longer-term operating performance,” Bob Rossiter, Lear’s chairman and chief executive, said in a statement.

The bank loans will help the company refinance its 2007 debt maturities early, Rossiter said.

Lear said it had reached an agreement in principle for the International Automotive Components Group to acquire Lear’s European Interiors Systems Division in exchange for 34 percent of the stock in IAC.

The company said it suspended the quarterly cash dividend to give it more liquidity given current auto industry conditions.