Visteon, Ford Sign Memorandum of Understanding for New Business Arrangement

Van Buren Township, Michigan (ots/PRNewswire) -

- Plan would streamline Visteon's North American operations,
improve Visteon's cost-competitiveness and balance its customer and
geographic footprint

Visteon Corporation (NYSE: VC) has signed a memorandum of
understanding with Ford Motor Company that provides for significant
structural changes to Visteon's North American manufacturing
operations. When finalized, the transaction is expected to increase
Visteon's competitiveness by streamlining and improving the cost
structure of its North American operations.

(Logo: http://www.newscom.com/cgi-bin/prnh/20001201/DEF008LOGO )

"This is a milestone agreement which, upon completion, will create
a more competitive business structure for Visteon in the United
States and remove a number of structural barriers to the company's
long-term sustainable success," said Mike Johnston, Visteon's
chairman-elect and chief executive officer. "Visteon will have a
more competitive North American structure, a more balanced global
customer portfolio and a healthy regional mix. We will be able to
accelerate our focus on products most valued by our customers and be
well-positioned for growth."

Going forward, a smaller, leaner Visteon will focus its
engineering and capital resources on products that have been
generating significant new business with major vehicle manufacturers
-- interiors, climate control and electronics, including lighting.
Visteon has significant global scale in these products and intends
to strengthen its position through a more focused investment in
capital, people and technology.

"The completion of this transaction will be a significant step
forward for Visteon. We will now have the opportunity to
appropriately size our operations on a global basis," said Johnston.
"This positions us to achieve our vision of being a world-class
automotive supplier. In every aspect of our business, we're
strengthening Visteon as a global competitor. However, we will need
to take significant additional restructuring actions over the next
several years to bring our vision to full fruition."

Key aspects of the proposed agreement include:
    -  Transfer of manufacturing facilities and other locations listed
       below and certain associated assets, including machinery, equipment,
       tooling, inventory, purchase and supply contracts, and prepaid
       assets to a separate entity that will be acquired by Ford. Following
       the closing of the transaction, Visteon will not have any ownership
       of this new entity.
    -  Termination of the current leasing arrangements for approximately
       17,400 Ford-UAW employees.
    -  Relief of Visteon's remaining liability, including about US$1.5
       billion of previously deferred gains, related to Ford-UAW
       post-retirement health care and life insurance benefit obligations
       (OPEB) for former assigned employees and retirees and certain
       salaried retirees, totaling about US$2 billion.
    -  Transfer of all assets in the Visteon Corporation UAW Voluntary
       Employee Beneficiary Association (VEBA) to the Ford-UAW VEBA.
    -  Ford would agree to reimburse up to US$550 million of further
       restructuring actions by Visteon.
    -  Payment of transferred inventory based on net book value at the time
       of closing.
    -  Upon the signing of the definitive agreement, Ford will provide a
       secured loan of US$250 million to refinance Visteon's public notes
       due August, 1, 2005. Visteon will repay the loan when the transaction
       is closed.
    -  Visteon will issue to Ford warrants to purchase 25 million shares of
       Visteon stock at an exercise price of US$6.90 per share.

Under the proposed arrangement, Visteon will also provide
transition services, such as information technology, human resources
and accounting support to facilitate the operations of the
Ford-managed legal entity. These services will be available to the
Ford-managed legal entity at cost for up to 39 months after closing
the transaction, and for a period thereafter at an agreed upon
mark-up. In addition, certain salaried and hourly employees will be
leased from Visteon and will be directly assigned to support the
operations of the Ford-managed legal entity. These resources will be
leased at cost from Visteon until transitioned to a subsequent buyer.

The non-binding memorandum of understanding is subject to certain
customary conditions, regulatory approvals and the ratification of
the affected Ford-UAW members assigned to Visteon. Visteon and Ford
expect to sign a definitive agreement on or before August 1, 2005
and close the transaction by the end of the third quarter of 2005.

Transferred Plants and Facilities

At closing, Visteon will transfer the following plants and
facilities, in alphabetical order by location:

Plant / Facility               Location           Primary Operation
    Bellevue                    Bellevue, Ohio        Service Parts
    Autovidrio                Chihuahua, Mexico       Glass
    El Jarudo                 Chihuahua, Mexico       Powertrain
    Chesterfield           Chesterfield, Michigan     Interior
    Commerce Park South       Dearborn, Michigan      Engineering/Support
    Glass Labs                Dearborn, Michigan      Glass
    Product Assurance Center  Dearborn, Michigan      Engineering
    Visteon Technical
     Center Product           Dearborn, Michigan      Engineering/Support
    Indianapolis            Indianapolis, Indiana     Chassis
    Kansas City VRAP        Kansas City, Missouri     Interior
    Carlite Automotive        Lebanon, Tennessee      Glass
    Milan                       Milan, Michigan       Powertrain / Exterior
    Monroe                     Monroe, Michigan       Chassis
    Nashville               Nashville, Tennessee      Glass
    Lamosa I, II, III       Nuevo Laredo, Mexico      Chassis / Powertrain
    Vitro Flex                Nuevo Leon, Mexico      Glass
    Sheldon Road              Plymouth, Michigan      Climate Control
    Saline                     Saline, Michigan       Interior
    Sandusky                    Sandusky, Ohio        Powertrain / Exterior
    Sterling             Sterling Heights, Michigan   Chassis
    Tulsa                      Tulsa, Oklahoma        Glass
    Utica                      Utica, Michigan        Interior / Exterior
    Rawsonville              Ypsilanti, Michigan      Powertrain
    Ypsilanti                Ypsilanti, Michigan      Powertrain

A Leaner, More Competitive Visteon

The agreement will reshape Visteon from a company that had
US$18.7 billion in revenue in 2004 to a leaner, more competitive
US$11.4 billion organization, based on estimated 2005 pro forma
revenue.

"Visteon is extremely well-positioned around the world, with
strong systems and engineering expertise and manufacturing
capabilities serving our customers on a 24 / 7 schedule," Johnston
said. "This agreement begins to place our North American structural
issues behind us and we are preparing to restructure to be a more
efficient, productive and competitive Tier I supplier."

Upon completion of the transactions, Visteon will have a more
balanced regional sales mix. Based on 2005 estimated pro forma
revenue, regions outside North America would represent about 60
percent of Visteon's total sales -- up from 30 percent in 2004.
Global revenue would be more equally distributed between North
America and Europe with Asia Pacific accounting for the remaining 20
percent of sales. Including unconsolidated sales from joint ventures
in the Asia Pacific region, Visteon's geographic sales mix would
become more balanced across all regions.

Visteon's customer portfolio would also gain balance as sales to
customers other than Ford would increase to nearly 50 percent of the
company's total global revenue, up from the 2004 level of 30 percent.

"Through the proposed Ford agreement and additional restructuring
activities that will need to be implemented, Visteon has defined a
path to profitability that builds on its previous operational
improvements and restructuring actions", said Jim Palmer, executive
vice president and chief financial officer. "While this agreement
places the company on track for sustainable long-term success, we
will continue efforts to improve our operational and financial
performance," he said.

The completion of the transaction contemplated by the memorandum
of understanding with Ford will allow Visteon to strengthen its
global competitive position in interiors, climate, electronics and
lighting. On a limited basis in Europe, Visteon will continue to
serve customers in certain chassis and powertrain products lines.
Visteon's Aftermarket operations in North America and Europe will
continue to offer mobile electronics and underhood parts. The
transfer of operations to the new entity will remove glass products
from Visteon's aftermarket product portfolio.

Visteon expects that the transaction will result in a net gain in
the range of about US$450 -- US$650 million depending upon the
actual amount of assets transferred. It is expected that Visteon
would recognize a non-cash charge of approximately US$1.3 billion in
the second quarter offset by the gains primarily associated with the
relief of liabilities associated with the transaction upon closing
of the transaction at the end of the third quarter.

Cash and Liquidity

Visteon and Ford also amended their March 10 Funding Agreement to
further change the payment terms for certain components supplied by
Visteon in the United States and received from and after June 1,
2005 to an average 18 days through July 31, 2005, then 22 days from
August 1, 2005 to December 31, 2005. If the transaction is
completed, payment terms would continue at 22 days through December
31, 2006. Payment terms would be 26 days in 2007. Effective January
1, 2008, the payment terms would be increased to 34.5 days and
effective Jan. 1, 2009, normal payment terms would apply.

On Friday, May 20, 2005, Visteon received amendments from its
lenders under its major credit facilities that will permit it to
delay delivery of its first quarter 2005 financials until July 29,
2005. Further, Visteon is currently in discussions with its global
credit line banks regarding its financing alternatives, including
the renewal or replacement of its 364 day facility.

Conference Call Scheduled at 11 a.m. EDT Today

Mike Johnston and Jim Palmer, executive vice president and chief
financial officer, will host a conference call today, Wednesday, May
25 at 11 a.m. EDT to review today's announcement. To participate in
the call, callers in the U.S. should dial +1-888-452-7086 and
callers outside of the U.S. should dial +1-706-643-3752. Please call
approximately 10 minutes before the start of the conference. For a
replay of the conference, those in the U.S. should dial
+1-800-642-1687; outside the U.S., callers should dial
+1-706-645-9291. The pass code to access the replay is 6636927
(domestic and international). The replay will be available until
June 2, 2005.

The conference call, along with the press release, presentation
material and other supplemental information, can be accessed through
the investor relations section of Visteon's web site at
http://www.visteon.com .

Visteon Corporation is a leading full-service supplier that
delivers consumer-driven technology solutions to automotive
manufacturers worldwide and through multiple channels including the
global automotive aftermarket. Visteon has about 70,000 employees
and a global delivery system of more than 200 technical,
manufacturing, sales and service facilities located in 24 countries.

This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are not guarantees of future results and
conditions but rather are subject to various factors, risks and
uncertainties that could cause our actual results to differ
materially from those expressed in these forward-looking statements,
including the automotive vehicle production volumes and schedules of
our customers, and in particular Ford's North American vehicle
production volumes; our ability to enter into definitive agreements
that reflect the terms of the Memorandum of Understanding with Ford
and close the transactions that are contemplated in the Memorandum
of Understanding; implementing structural changes that result from
the closing of the transactions contemplated by the Memorandum of
Understanding in order to achieve a competitive and sustained
business; our ability to satisfy our future capital and liquidity
requirements and comply with the terms of our credit agreements; the
results of the investigation being conducted by Visteon's Audit
Committee; the financial distress of our suppliers; our successful
execution of internal performance plans and other cost-reduction and
productivity efforts; charges resulting from restructurings,
employee reductions, acquisitions or dispositions; our ability to
offset or recover significant material surcharges; the effect of
pension and other post-employment benefit obligations; as well as
those factors identified in our filings with the SEC (including our
Annual Report on Form 10-K for the year-ended December 31, 2004). We
assume no obligation to update these forward-looking statements.

Web site: http://www.visteon.com

Rückfragehinweis:
Kim Welch, +1-734-710-5593, kwelch5@visteon.com, or Jim Fisher,
+1-734-710-5557, jfishe89@visteon.com, both of Visteon Corporation;
NOTE TO EDITORS: Visteon news releases, photographs and product
specification details are available at http://www.visteon.com;
Photo: NewsCom:
http://www.newscom.com/cgi-bin/prnh/20001201/DEF008LOGO; PRN Photo
Desk, photodesk@prnewswire.com

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