By Kevin Krolicki and Jui Chakravorty
DETROIT/NEW YORK, July 2 (Reuters) - Billionaire investor
Wilbur Ross is among those considering a bid for the assets of
bankrupt auto parts supplier Delphi Corp, two people with
knowledge of the matter said on Thursday.
Hedge fund Elliott Management is also preparing a credit
bid for Delphi, which was spun off by General Motors Corp in
1999, the sources said.
The interest by both investors could complicate an effort
by Delphi to complete a deal to sell its assets to GM and
private equity firm Platinum Equity LLC.
Delphi could not be immediately reached for comment.
Ross declined to comment.
"As you know, our policy is not to comment on rumors," Ross
said in an email to Reuters.
Ross is no stranger to the auto parts business, having
built an interiors supplier in part by combining the business
of the former Collins & Aikman and the interiors business of
Lear Corp in recent years.
Ross also has been known as a consolidator in other
distressed industries, such as steel and coal. In an interview
in December, Ross said he did not see how Delphi would survive
a GM bankruptcy.
The four-year Delphi bankruptcy has been a cash drain for
GM, which is now also operating in bankruptcy as it seeks
permission to sell most of its assets to a new company funded
by the U.S. Treasury.
As part of a deal brokered by the Obama administration's
autos task force, GM would take over Delphi's steering business
and four other U.S. plants.
The rest of the Delphi business, which includes its
international operations, would be sold to Platinum in a $3.6
billion deal.
GM has agreed to provide $2 billion in funding to Beverly
Hills, California-based Platinum, the automaker has said.
Platinum said it was confident its bid would be approved by
the bankruptcy court overseeing the Delphi reorganization.
"As Delphi's court supervised bankruptcy reorganization
reaches culmination, we are confident that our offer will be
validated as the highest and best before the court," Platinum
principal Mark Barnhill said in a statement.
"We have never been the only prospective bidder in the
process, nor even necessarily the favored bidder. But we have
persevered with only one objective: Putting the strongest and
most comprehensive solution on the table and delivering value
for all of Delphi's stakeholders."
BANKRUPTCY COURT SHOWDOWN
In a statement filed with the bankruptcy court last month,
Delphi Chief Financial Officer John Sheehan supported the
proposed Platinum deal and detailed the negotiations involving
the company, GM and U.S. government officials that had led to
it.
But Elliott Management opposes the Platinum offer on the
grounds it undervalues Delphi's assets and has said it would
make a credit bid using the amount it is owed under Delphi's
bankruptcy loan.
Through affiliate firms, Elliott purchased a large share of
Delphi's debtor-in-possession financing in the secondary market
in June, according to two people with knowledge of the
transaction.
Until that point, hedge fund Sliver Point Capital had led a
group of DIP lenders in negotiations with Delphi and U.S.
officials in seeking a larger recovery in cash and ownership of
a reorganized company, court filings show.
The amount of Delphi's bankruptcy loan held by Elliott has
not been disclosed.
In his affidavit, Sheehan said a new investor had become
the largest bankruptcy lender in June at a time when the
largest tranche of those loans was trading near 20 cents on the
dollar. The statement did not identify Elliott by name.
Delphi has $3.29 billion in outstanding DIP financing, with
over 80 percent of that in a "Tranche C" facility projected to
recover about 20 cents on the dollar under the Platinum deal.
In a win for Elliott, the U.S. bankruptcy judge overseeing
the case denied earlier this week a request from Delphi that
would have reimbursed Platinum up to $30 million in expenses if
its proposed deal is unsuccessful.
Judge Robert Drain said the $30 million payout was "not
reasonable or appropriate."
A court hearing on the Delphi sale is scheduled for July
23. The case is In re: Delphi Corp et al, U.S. Bankruptcy
Court, Southern District of New York, No. 05-44481.
(Reporting by Kevin Krolicki and Jui Chakravorty; additional
reporting by David Bailey; editing by Andre Grenon)
