Lear Expects 'Going Concern' Notice

Lear Corp is no longer in compliance with its primary credit facility and expects auditors to cast doubt on its ability to continue as a going concern, the auto parts maker said Friday.

The warning, which sent Lear shares down more than 8 percent to 67 cents, is the latest in a series of grim outlooks from automakers and parts suppliers reeling from tight credit conditions and the lowest U.S. vehicle sales in 27 years.

Lear , which makes seating and electrical equipment for vehicles, has suffered because of steep production cuts by General Motors and Ford , which account for more than 40 percent of its global revenue.

Suppliers get paid 45 to 60 days after delivering parts, and analysts have warned of a wave of failures in March and April, when the nearly total shutdown in U.S. auto production at the start of the year starts to hit their balance sheets hard.

Last week U.S. auto suppliers submitted a formal request to the U.S. Treasury for $18.5 billion in emergency funding, saying they have been shut off from credit at a time when payments from automakers are declining rapidly.

In a filing with the U.S. Securities and Exchanges Commission, Lear also said it could not meet the deadline for submitting its annual report because it needed more time to conclude talks with lenders about an amendment to its credit facility.

Lear said the annual report would contain an explanatory paragraph from auditors with respect to the company's ability to continue as a going concern.

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A going-concern opinion means the auditors cannot have reasonable assurances that a company will survive for the next fiscal period.

On Wednesday, another parts supplier, Visteon , warned that it was in danger of breaching its debt covenants. It also reported its 10th consecutive quarterly loss and said it was considering selling off or eliminating parts of its operations to shore up cash.

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