CEO Doug Del Grosso discusses Adient's response to the COVID-19 pandemic
We find ourselves in extraordinary times, coming together to address the disruption to our lives caused by the COVID-19 pandemic. On behalf of Adient leadership, I want to share some of the actions we are taking to help ensure the health and safety of our employees, our communities and our business as the outbreak continues to escalate.
First and foremost, the Adient team is working tirelessly to protect the health of our employees. We have increased sanitization efforts and continue rigorous hygiene protocols in all our facilities. We have instituted a remote work policy for those who can perform their work from home. For those still working in our plants, we monitor employees' health before they enter Adient facilities and have restricted all visitors. Our thoughts are with our colleagues who may have family members or friends suffering from the virus and we wish them quick and complete recoveries.
Just as we have taken measures to help ensure the safety of our employees, we are acting to ensure the long-term health of our business.
As the pandemic spreads around the world, the automotive industry is among those being impacted in unprecedented ways. While production is slowly resuming in China, our customers are suspending vehicle production across Europe and North America, which dramatically affects our operations as their partner.
Adient has taken proactive and immediate action to address these unanticipated events and the tremendous amount of uncertainty as to when production will resume. Our top priority is to reduce our cash burn rate and increase our liquidity. To advance this objective, we have acted quickly to implement actions to help mitigate the negative impact of lost sales, including the difficult, but prudent, decision to reduce the pay of non-plant employees in the U.S. by 20% — this includes my salary as well as those of the Board of Directors and my leadership team. In European countries, discussions have started with representative bodies to implement cost reduction actions, with or without government financial aid.
With regard to liquidity, in a proactive measure to bolster its cash position and preserve financial flexibility, on March 20, 2020, Adient gave notice that the company plans to draw down $825M in principal amount under its Asset Based Revolving Credit Facility. Combining the recent borrowings, cash on hand as of Dec. 31, 2019 and the approximate $175M of remaining borrowing capacity under the revolving line of credit, provides Adient with just under $2B in liquidity. In addition, proceeds from recently announced strategic actions, which are expected to close before Sept. 30, 2020, are expected to total approximately $575M.
The team continues to explore options in all regions to offset the effects of this global disruption. While we cannot predict how long this crisis will last, we know that it will pass and when it does, Adient will be ready to get back to business.
Doug Del Grosso
President and CEO