Delphi’s lenders have won an auction that will enable them to buy the bankrupt company’s remaining assets and a bankruptcy judge will hold a hearing tomorrow (29 July) to make a final ruling on the sale.
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Acceptance of the offer will allow Delphi, once the world’s largest vehicle components supplier, to emerge from bankruptcy after nearly four years.
Lenders, which include Elliott Management, Monarch Alternative Capital and Silver Point Capital, beat off a US$3.5bn bid by Los Angeles buyout firm Platinum Equity which included another $2bn of GM finance.
The lenders feared this plan amounted to a ‘sweetheart’ deal that would pay debts back at 20 cents on the dollar. Bankruptcy loans are typically paid back in full. A judge halted the Platinum deal and ordered Delphi to allow competing bids.
The lenders agreed to forgive $3.5bn in debtor-in-possession financing owed to them by Delphi. Reports said GM also agreed to pay about $3bn into the deal and take back five Delphi plants, including its steering gear operations.
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