Troubled auto parts maker Delphi Corporation (DPHIQ.PK) has reached a deal with bankruptcy lenders and former parent General Motors Corp. (GMGMQ.PK) for a plan to exit from bankruptcy protection, reports said Thursday.
The agreement among Troy, Michigan based Delphi, automaker General Motors and Delphi's bankruptcy financing lenders would set aside the deal set with private-equity firm Platinum Equity and allow the company to exit Chapter 11, reports noted. Delphi's bankruptcy lenders include Elliott Management, Silver Point Capital and Monarch Alternative Capital.
Delphi, which filed for bankruptcy in October 2005, has signed a deal to sell most of its assets to Los Angeles-based Platinum Equity in a $3.6-billion deal, backed largely by General Motors Co.
Under the terms of the deal, General Motors would contribute a total of about $3.9 billion, including a $2 billion equity investment in Platinum, to help finance the transaction. In addition, GM also will provide a $250 million credit facility to keep the company going until it emerges from bankruptcy protection late this summer. Platinum would contribute a maximum of $500 million in financing.
In exchange, Delphi, which was GM's parts division before being spun off in 1999, is expected to sell four plants and its steering business back to GM. Delphi's other 'noncore' plants and assets are expected to be sold off over time and Platinum Equity would be allowed to operate Delphi's businesses both in the U.S. and abroad.
However, several lenders that provided bankruptcy funding to Delphi said that they were seeking to make their own competing offer for Delphi's assets. They expressed confidence that a credit bid submitted by the lenders will be superior and would provide a better return for the company's senior lenders than any other proposal.
Reportedly, spokesmen from Delphi, GM and Platinum Equity were not immediately available for comment
Meanwhile, a group of retirees of Delphi filed suit Thursday, saying it needs an independent administrator to help stop the company from terminating its pension plans for salaried employees and transferring the obligation to the Pension Benefit Guaranty Corp.
DPHIQ.PK closed Thursday's regular trading session at $0.06.
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