Bankrupt GM to buy Bankrupt Delphi Assets
Filed Under (Business News) by fred on 15-07-2009
Tagged Under : bankrupt, Delphi Corp, General Motor, GM
Reuters reported that a US bankruptcy judge gave General Motors Corp (GM) permission on Monday to buy several assets of another bankrupt company, Dephi Corp, an auto parts supplier as part of a deal with a private equity firm that could take Delphi out of bankruptcy. How ironic. A bankrupt helping a bankrupt to get out of bankruptcy.
Judge Robert Gerber of US Bankruptcy Court in Manhanttan gave “Old GM”, now known as Motors Liquidation Corp, permission to buy Delphi’s steering business and a number of its plants, deemed essential to GM’s ability to build cars.
Delphi is by far GM’s largest supplier, accounting for about 11.3 % of its purchases in 2008.
If GM’s partner in the bid for Delphi, private equity firm Platinum Equity, won the auction for Delphi that is set for later this week, “New GM” or General Motors Co – which emerged from bankruptcy last Friday after the carmaker sold the bulk of its best assets to a US government-led group, paid by taxpayer money – would reimburse Old GM and receive the Delphi assets.
Old GM, which now consists of the remainder of the automaker’s assets, remains in bankruptcy court. Delphi, which was spun off from GM in 1999 (parents helping its kid?), filed for bankruptcy in 2005, said last month that it had reached a deal to sell most of its global operations to Platinum, in a plan that with the participation of GM would allow Delphi to emerge from Chapter 11 bankruptcy.
In a court document, GM had said it expected the transaction to cost US$3.9 billion, including a payment of US$1.1 billion to Delphi’s creditors (probably the same creditors for GM?) and a US$2 billion equity stake in Parnassus, a unit of Platinum, which has submitted the only bid so far to take Delphi out of bankruptcy.
Platinum would invest US$250 million in Delphi under terms of the plan. But the deal still has to get approval from the judge overseeing Delphi’s bankruptcy.
