Delphi creditors vote to reject Platinum deal
NEW YORK — The majority of Delphi Corp.’s creditors have voted against a deal that would allow the auto supplier to be acquired by private-equity firm Platinum Equity and possibly emerge from bankruptcy protection.
Of the 17 classes of creditors, 10 voted against the plan, two voted for it and five didn’t vote, according to court documents filed late Monday.
Delphi has said that if it can not convince its creditors to support a deal with Platinum or another party before a hearing set for Thursday, it would resort to a 363 sale, which refers to the section of the bankruptcy code that outlines the process for an auction of assets that the court oversees.
Late Tuesday, Delphi said it again postponed the auction, this time to July 24, to allow for more talks between the company, General Motors, Platinum Equity and lenders. Last Friday, U.S. Judge Robert Drain had ordered the July 17 auction be delayed until today for similar reasons. Delphi also said a hearing on the approval of its plan, which had been slated to take place Thursday, was pushed back to July 29.
Under a deal reached last month, Beverly Hills, Calif.-based Platinum would acquire most of Troy, Mich.-based Delphi’s businesses with the help of billions of dollars in aid from General Motors Corp.
Under the deal with Platinum, the Beverly Hills, Calif.-based firm would acquire Delphi with the help of billions of dollars in aid from GM.
In exchange, GM would get certain parts of Delphi, including its Saginaw, Mich.-based steering business, and much needed assurance of a steady supply of the parts it needs to produce its cars and trucks. Other “noncore” plants and assets would be sold off over time.
Delphi, which was GM’s parts division before being spun off in 1999, filed for Chapter 11 in October 2005. It still produces about 10 percent of the parts used in GM’s global production and its components go into nearly all of GM’s North American production lines.
But many of Delphi’s lenders have balked at the deal, calling it a “secretly negotiated transaction” that violated Delphi’s obligations to maximize the value of the lenders’ investment.
The lenders can still submit their own credit bid for the company, which would involve them forgiving the combined $3.45 billion in debt that is owed to them.
The company said Tuesday it has reached agreement with its official unsecured creditors’ committee and Wilmington Trust Corp., to withdraw their objections to the company’s restructuring plan in exchange for boosting the amount distributed to unsecured creditors to a maximum of $300 million rather than $180 million as originally proposed, and paying some legal fees.
Delphi also said it agreed to pay $3 billion to U.S. Pension Benefit Guaranty Corp. to settle the pension insurer’s various claims against the company and its global affiliates. The PBGC also will receive additional funds from GM in exchange for liabilities associated with the company’s various pension plans. The settlement agreement has been filed in bankruptcy court for approval.
GM said it has met and continues to meet its obligations toward the Delphi pensions. The automaker noted that when it spun off Delphi, it did agree to top-up pension benefits for certain groups of hourly employees and retirees in the event that Delphi’s hourly pension plan was terminated.
“As with other union agreements that it has assumed from the old GM, General Motors Company will honor these commitments,” the automaker said in a statement.
GM said it has reached a preliminary deal with the PBGC under which it would pay the insurer $70 million in cash, plus a portion of future payouts that GM will receive from the company that acquires Delphi assets.
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