By David Barkholz
Detroit, Michigan -- A group of Delphi Corp. stockholders led by billionaire David Tepper has hired financial advisers to explore a "potential restructuring, acquisition or other transaction involving Delphi".
Tepper's hedge fund, Appaloosa Management LP, and Harbinger Capital Partners Master Fund I Ltd have hired UBS Securities LLC and Merrill Lynch & Co. to assist in structuring and finding financing for any possible deal.
The funds managers agreed not to disclose sensitive operating and financial information which Delphi might provide as part of the analysis, according to a submission filed with the US Securities and Exchange Commission on 1 Aug.
Appaloosa bought 52 million Delphi shares soon after the company put its US operations into Chapter 11 bankruptcy reorganisation in Oct, 2005.
Though equity stakeholders typically have their investments wiped out after bankruptcy debts are paid, Tepper said this year that Delphi would retain value because of its profitable overseas operations.
Delphi's debts, however, are mounting.
General Motors Corp. (GM) is expected to make about $5000 million in unsecured claims against Delphi for the cost of post-retirement health care benefits from about 12500 Delphi workers who took incentives to retire from Delphi as GM employees.
The claims, opposed by Tepper and other creditors, could leave little money for Delphi stockholders if the bankruptcy court approves them.
GM would be Delphi's largest creditor and could become its dominant stockholder if the debt is eventually converted into shares when Delphi comes out of Chapter 11.
Delphi spokeswoman Claudia Piccinin declined to comment on the specifics of Tepper's submission.
In related news, Delphi said on 31 July that it had a net loss of approximately $1860 million in June, including a $1560 million charge for pension and other benefits related to buyouts of unionised US workers.
Excluding the charges, the operating loss was about $290 million, slightly higher than the $277 million operating loss in May.
Delphi intends to emerge from Chapter 11 in 2007.
Delphi and its six unions are at loggerheads over wage and benefit cuts of 60 percent demanded by Delphi as part of a restructuring of its US operations.
A hearing is scheduled 11 Aug on Delphi's bid to terminate its labour agreements.
From Plastics News (A Crain publication)