Divestiture and held for sale

3 Months Ended

Mar. 31, 2020

Discontinued Operations and Disposal Groups [Abstract]

VBS

In 2019, the Company started exploring strategic options for its non-core business in the Brake System segment. In the first quarter of 2020, management committed and approved a plan to sell VBS. The Company expects to sell the business within one year from management's approval of the plan. The business and its associated assets and liabilities met the criteria for presentation as held for sale as of March 31, 2020 and were required to be adjusted to the lower of fair value less cost to sell or carrying value. This resulted in an impairment charge of approximately $144 million which was recorded within Gain/(loss) on divestiture and assets held for sales, net on the Condensed Consolidated Statements of Operations during the period end March 31, 2020. The impairment was measured using third party sales pricing to determine fair values of the assets. The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement." The assets and liabilities associated with the transaction are separately classified as held for sale in the Condensed Consolidated Balance Sheet as of March 31, 2020 and depreciation of long-lived assets ceased on March 31, 2020. The planned divestiture did not meet the criteria for presentation as a discontinued operation.

The major classes of assets and liabilities held for sale were as follows:



(Dollars in millions)	As of
Assets held for sale	March 31, 2020
Prepaid exp/accrued income	$	1

Property, plant and equipment, net	79
Current deferred charges	90

Impairment of carrying value	(144)
Total assets held for sale	$	26
Liabilities held for sale
Accounts payable	6
Accrued exp/prepaid income	1
Total liabilities held for sale	$	7

VNBS

In the fourth quarter of 2019, management approved a plan to sell VNBS. The business and its associated assets and liabilities met the criteria for presentation as held for sale as of December 31, 2019, and depreciation of long-lived assets ceased. The divestiture did not meet the criteria for presentation as a discontinued operation.

On October 30, 2019, the Company entered into definitive agreements with Nissin-Kogyo Co., Ltd., and Honda Motor Co., Ltd to divest VNBS. On February 3, 2020, the Company completed the sale of VNBS. The aggregate purchase price of the transaction was $176 million, subject to certain adjustments. The net cash proceeds after adjusting closing fees was $175 million. The Company recognized a gain on the divestiture of $77 million, net of closing cost.

The major classes of assets and liabilities held for sale were as follows:


(Dollars in millions)	As of
Assets held for sale	December 31, 2019
Cash and cash equivalents	$	35
Receivables, net	58
Inventories, net	17
Property, plant and equipment, net	126
Intangible assets, net	66
Other current assets	15
Total assets held for sale	$	317
Liabilities held for sale
Accounts payable	50
Accrued expenses	20
Related party short-term debt	12
Pension liability	8
Other current liabilities	28
Total liabilities held for sale	$	118