Lear Shares Fall After Analyst Cuts Rating

NEW YORK (AP) — Shares of Lear Corp. plunged on Monday after a Barclays analyst downgraded the auto parts supplier, saying shareholders will be left with little value after the company restructures.

Shares fell 36 cents, or 19 percent, to $1.57 in morning trading.

Analyst Brian A. Johnson cut shares of Lear to "Underweight" from "Neutral" in a client note on Monday. He said shareholders of Lear, which makes automotive seating and electrical systems, will suffer "significant equity dilution" even if the company is able to restructure out of court.

He noted that Lear has been in violation of its debt covenants since Dec. 31. It received a waiver on certain debt payments last month, but only through June 30.

"Lear has made it clear it is looking for a complete overhaul of its capital structure, and that if this couldn't be achieved out of court, it would be done in bankruptcy," Johnson said. "There may not be enough time left for Lear to make an out-of-court exchange offer to debtholders to be accepted by June 30."