Continental Automotive to delay some employee paychecks up to 2 days

ERJ staff report (CDB) By Ryan Beene

Detroit, Michigan -- Continental Automotive Systems Inc. will delay paychecks for thousands of US employees expecting to receive them on June 30.

Less than half of Continental's roughly 10 000 US employees are expected to be affected by the delay, and those employees will receive their checks no later than July 2, said Kathryn Blackwell, Continental vice president of communications and marketing for the NAFTA Region.

The delay is a move to create some breathing room to meet the requirements of the company's financial covenants in the second quarter, Blackwell said. She declined to discuss the details of the covenants in question, but said the delay is not related to a liquidity issue.

“It's not an issue of being able to meet the payroll, it's simply a timing issue,” Blackwell said. “We don't anticipate this being an issue in the third quarter or in the fourth quarter.”

The Auburn Hills-based parts supplier's Germany-based parent, Continental AG, is also delaying paychecks to all of its 45,000 workers in Germany and some in France, Bloomberg News reported.

Ratings firm Standard & Poor's said in a June 10 research note that Continental AG's financial covenants related to €11.8 billion in debt, or about $16.5 billion at current exchange rates, could create pressure for the parts maker in the second quarter, and possibly the rest of 2009.

Continental's NAFTA operations, based in Auburn Hills, posted revenue of about $4.2 billion in 2008. The auto supplier stability management systems, electronic chassis systems and brake systems.

From CRAIN'S DETROIT BUSINESS (A Crain publication)