July 2 (Bloomberg) -- Lear Corp., the world’s second- largest maker of automotive seats, plans to file for Chapter 11 bankruptcy after reaching an agreement with representatives of secured lenders and bondholders.

Lear is seeking support from other bondholders and lenders and plans to “commence shortly” with a restructuring under court protection, the Southfield, Michigan-based supplier said in a statement yesterday. The company said it has commitment for $500 million in financing for the bankruptcy and exit from a syndicate led by JPMorgan Chase & Co. and Citigroup Inc.

The manufacturer will seek bankruptcy protection after low auto production globally by customers such as bankrupt General Motors Corp. cut into sales. More than 20 partsmakers have filed for bankruptcy this year, according to the Original Equipment Suppliers Association trade group.

“The dramatic falloff in the market has impacted suppliers large and small,” said Mike Wall, supplier analyst at industry consultant at CSM Worldwide in Northville, Michigan.

The New York Stock Exchange suspended trading of Lear’s shares because of the announcement, according to a statement today from the NYSE’s regulatory unit.

‘Full’ Payback Aim

The restructuring will protect customers and suppliers, and provide pay for the “vast majority of trade creditors in full,” Lear said.

“We intend to complete the restructuring as quickly as possible, and emerge as an even stronger and more competitive partner to our customers,” Chief Executive Officer Bob Rossiter said in the statement.

Mel Stephens, a spokesman, declined to give further details on the bankruptcy.

Standard & Poor’s Ratings Services lowered its issue-level rating on Lear’s senior secured debt to ‘D’ from ‘CC,’ after the intended bankruptcy announcement, the New York-based ratings provider said in a statement.

Lear, which said on May 14 it sought to restructure debt outside of Chapter 11, tried to renegotiate its borrowing after getting a waiver through June 30 on some conditions and a 30-day grace period for $38 million in interest payments. The supplier would join Visteon Corp. and Metaldyne Corp. among major suppliers filing for bankruptcy protection this year.

Top Two Customers

GM, based in Detroit, was Lear’s largest customer last year, accounting for 23 percent of the supplier’s $13.6 billion in sales, followed by Ford Motor Co. at 19 percent, according to an annual filing.

Low production by those companies contributed to a combined net loss of $1.05 billion in the past three quarters for Lear, which also makes electronic components.

The supplier’s ability to secure financing shows that lenders, who have been shunning auto-industry companies, may be easing credit in light of the U.S. government-backed bankruptcy restructurings of GM and Chrysler LLC, said analyst Wall.

“Some of the banks out there are starting to dip their toes in the financing waters,” Wall said.

To contact the reporter on this story: Alex Ortolani in Southfield, Michigan, at aortolani1@bloomberg.net

Last Updated: July 2, 2009 09:59 EDT