Ford (F) and General Motors (GM) are in talks with First Brands over a potential lifeline to avoid supply disruption, as the car parts supplier seeks financing to help it continue operations during Chapter 11 proceedings, sources told the Financial Times.
A group of carmakers is negotiating a financing arrangement for First Brands that would involve them paying in advance for products they plan to receive. Talks were near the finish line, but the deal could still fall apart.
“There is a group of customers working to get components out as quickly as possible to avoid any disruption,” a person familiar with the matter told FT.
They added that several carmakers were participating in the talks, but “Ford (F) is probably the most exposed and the one that’s got the most at risk here.”
First Brands makes important components for Ford (F) and GM (GM), including windscreen wiper parts for Ford’s bestselling vehicle—the F-150.
The car parts supplier, which has rapidly burned through cash during its bankruptcy proceedings, projected that it would run out of money by the first week of February without additional funding.
First Brands is winding down parts of its North American operations, including its Brake Parts, Cardone, and Autolite brands. Its remaining units will continue operating as it seeks buyers for its assets.