Van Buren Township sues Visteon over bond dispute
Van Buren Township sued auto supplier Visteon Corp. in U.S. Bankruptcy Court on Tuesday in Delaware over the extent of a shortfall in taxpayer-funded bonds to help build its corporate headquarters a decade ago.
Visteon — a former Ford Motor Co. subsidiary that was spun off — opened a new headquarters in 2004 in the western Wayne County suburb with assistance from the township that’s home to 28,000 residents. In 2002, the township created a development finance authority to help construction for the Visteon campus called Visteon Village.
The township says in a 15-page filing it could face a shortfall of between $23.7 million to $36.4 million by 2018 on $28 million in 30-year bonds initially issued in 2003 and has demanded Visteon take part in negotiations required under its bankruptcy exit to determine the amount Visteon should pay the township for the shortfall. The township said Visteon must negotiate “in good faith to determine of the amount of the shortfall” and make payments to address it.
Visteon spokesman Jim Fisher said the company had no comment.
An analysis of the shortfall conducted by Public Financial Management Inc. was prompted by concerns that Visteon would completely divest itself from its North American holdings. Visteon responded, according to the township, that it owes just $6,125.
Visteon filed for bankruptcy in May 2009 amid a sharp decline in auto production. The company shed $2 billion in debt during its 16-month bankruptcy stay. The township agreed to sharply reduce the taxable value of the $300 million project.
The township noted in its legal filing that Visteon is profitable. The company reported income of $7.51 billion worldwide last year with net income of $678 million.
In 2012, Visteon sold Visteon Village to Sovereign Partners LLC, a private real estate investment firm, for $81 million but kept Visteon Village as its headquarters pursuant to 15-year lease, through which Visteon occupies at least 500,000 square feet of leased space.
The township had a $9.8 million unsecured claim against Visteon, which it sold to Fulcrum Credit Partners LLC for $5.7 million.
In 2000, after its spinoff by Ford, Visteon operated 33 plants in North America and had more than 25,000 workers in the United States. Visteon now has one manufacturing plant in the U.S. — a plant in Alabama. In 2013, the company said it had 171 plants and facilities outside the U.S., including those in its joint ventures.
The township is currently refinancing the bond issue in a move that should save $1 million to $2 million.