Auto parts maker Delphi plans to hive off assets to recover from bankruptcy
28 Jun 2008
Auto parts maker Delphi Corp said on Friday it plans to sell part of its powertrain components business under its bankruptcy reorganization and will retain the services of investment bank Lincoln International to explore sale opportunities.
The business to be sold relates to the design and manufacture of the exhaust system front exhaust module ("hot end") including catalytic converters and exhaust manifolds. The business serves more than 10 major customers and includes sites in Blonie, Poland, Clayton, Australia, Gurgaon, India and Port Elizabeth, South Africa, as well as joint venture interests in Shanghai, China; and Monterrey, Mexico; and technical centers in Auburn Hills and Flint, Michigan; and Bascharage, Luxembourg.
Although Delphi intends to divest its exhaust business, the company intends to continue to provide full engine management systems, including air and fuel management, and combustion and valve-train technology.
Additionally, Delphi's non-equity based alliance with Belgium-based Bosal Group to offer complete exhaust systems will be terminated by mutual agreement. The alliance was announced in the spring of 2005. Delphi and Bosal together provided customized exhaust systems for automotive and commercial vehicle manufacturers worldwide to meet stringent exhaust emissions standards and reduce engine noise.
Delphi, which filed for bankruptcy protection in October 2005, has cut thousands of jobs and divested several business units in its reorganization.
Delphi's emergence from bankruptcy protection has been delayed after an investor group led by Appaloosa Management in April backed out of a $2.55 billion equity commitment to Delphi that had been intended to support its exit from bankruptcy. (See: Delphi rescue deal in dock as Appaloosa pulls out)
The company has begun the process of reworking the financial details in the equity plan and its exit financing. A prior $6.1 billion exit financing deal expired when the company failed to emerge from bankruptcy by mid April.