Venture Holdings Co. LLC executives say the company is near an agreement that would provide financial security through mid-April, but more parts of its Peguform GmbH subsidiary could end up in insolvency protection before the restructuring effort ends.
A German court started formal insolvency action for Peguform's German-based operations Oct. 1, leading to speculation by some industry watchers that all of Venture could end up in bankruptcy. But in the firm's first official comments on the action Oct. 25, Executive Vice President James Butler said the company is about to sign paperwork that will provide Venture with breathing room until April 15.
That forbearance agreement will impact a wide range of the company's ``constituents,'' Butler said, including creditors, suppliers and customers - the automakers that have stood behind Fraser, Mich.-based Venture to ensure its parts continue to flow.
``Their greatest concern in all of this is a disruption to their supply business,'' he said. ``We are a large supplier. If we have a hiccup, it causes them a great deal of concern and risk to their supply and a risk to their launches.''
Venture's holdings take in global plastics operations and accounted for $1.8 billion in sales last year. Peguform's German holdings are responsible for at least a third of that total.
The company is holding its own on a cash basis by relying on payments by automakers, including some being made in advance to ensure Venture's continued survival. The firm also is trying to assure all of its 1,600 suppliers, but Butler admitted that the sheer volume of businesses it works with means that it has not reached all of them yet.
``We realized [trade] creditors may not be getting return phone calls as quickly as they would like,'' he said. ``We bear your forgiveness.''
Four Peguform managers filed for insolvency in May after a bank canceled a line of credit for the company, which would guarantee payment of suppliers within a limited time schedule required by German law.
Venture executives have maintained the German management acted without corporate approval and that the move was unnecessary because a payment to restore the credit line was on its way even as the filing took place. But a German judge agreed the insolvency action should move ahead.
The financial troubles in Germany likely will impact other parts of the subsidiary, which also includes facilities in the Czech Republic, France, Spain and England. Some of those firms also may end up filing for some kind of bankruptcy protection, Butler said.
The German administrator will put Peguform's assets up for sale, and any sale may include holdings outside Germany to generate the highest possible value, he said. Potential buyers already have contacted the court there and Venture officials in the United States. Likely bidders include other North American-based businesses.
Venture has faced questions related to its financial future since the Peguform action in early May. The parent company had a $14 million payment on a loan due June 3, but won concessions to maintain status quo awaiting the German court decision.