From Detroit Free Press

SOUTHFIELD, MI -- Lear Corp. announced Wednesday it had secured $800 million in loans, suspended its quarterly dividend and reached an agreement to transfer its European interior business to a joint venture with W.L. Ross & Co. LLC.

The moves are designed to improve the financial health of the Southfield, MI-based auto supplier, which lost $1.4 billion last year. Lear Chairman and CEO Bob Rossiter has tried to allay concerns that his company is headed for bankruptcy, joining the likes of fellow auto suppliers Delphi Corp. and Collins & Aikman Corp.

"The senior leadership of Lear understands that near-term challenges within the automotive sector are weighing heavily on investors' minds," Rossiter said Wednesday in a statement. "By refinancing our 2007 debt maturities early, investors can be assured that the company is financially sound and focused on improving our longer-term operating performance."

The new loans will help Lear retire some existing debt and push other obligations further into the future. Suspending the quarterly dividend will save the company about $70 million this year.

The deal with Ross follows a framework agreement announced last October aimed at combining Lear's interior segment with other businesses to create a new venture. Ross also hopes to buy C&A.

Lear's interior business includes products such as instrument panels, headliners, door panels and interior trim, which have been under pressure because of higher prices for the resins used to make these products. In other segments, Lear makes seats, its biggest source of business, and electronics.

Lear's announcement Wednesday morning, gave its stock a boost. It closed up $1.54, or 9.1 percent, at $18.49.

Several analysts, however, were skeptical. Lear continues to operate in a tough market, they said.

"We still see more downside than upside risk to 2007 consensus earnings," wrote J.P. Morgan analyst Himanshu Patel in a research report.

Merrill Lynch reiterated a "sell" rating on Lear. "Although we believe Lear's near-term liquidity risk has been mitigated, competition in its core business is heating up," wrote Merrill Lynch analyst John Murphy.

Copyright 2006 Detroit Free Press. All Rights Reserved.

_______________________________________

Click here to view the rest of today's headlines.