Thursday, diversified manufacturer Linamar Corp. (LNR), in light of the uncertainties existing in the automotive marketplace, disclosed its current receivable exposure levels to GM and Chrysler while cautioning the risk associated with recovery of receivable in the event of bankruptcy filing by any of the auto majors.
The Ontario, Canada-based company indicated that combined total of Linamar's receivables balance greater than 20 days with GM and Chrysler is in aggregate estimated to be less than 30 million or approximately 9% of Linamar's total receivables balance as of March 31st, 2009.
Linamar said that under US bankruptcy laws, in the event of a company entering chapter 11 bankruptcy, all goods delivered within 20 days of the date of the chapter 11 filing obtain a special priority and are paid as part of the chapter 11 reorganization, once the reorganization plan is approved. Any goods shipped prior to 20 days before the date of the chapter 11 filing are at risk.
The company noted that a GM or Chrysler bankruptcy would be a unique and unusual event whose consequences can't be foreseen and there can be no assurance of recovery.
Linamar CEO Linda Hasenfratz said, "Our typical experience with customers in the past that have filed for chapter 11 protection is that we have been able to recover up to half or more of at risk receivables. We are pleased that our diversification efforts have allowed us to minimize our risk with any one customer in this way, particularly in light of uncertainties in the industry at this time".
Linamar closed Thursday's regular trading at C$3.09, up C$0.41 or 15.30%, on a volume of 159,544 shares on the Toronto Stock Exchange.
Copyright(c) 2009 RTTNews.com, Inc. All Rights Reserved
For comments and feedback: contact editorial@rttnews.com
