Federal-Mogul Won't Bid On Delphi, DIP Lenders Will - Source
08 Juli 2009 - 11:19PM
Dow Jones News
Auto-parts supplier Federal-Mogul Corp. (FDML) will not make a
last-minute bid to buy the assets of bankrupt peer Delphi Corp.
(DPHIQ), but it appears likely Delphi's debtor-in-possession
lenders will, according to a person familiar with the matter.
A media report Tuesday evening said Federal-Mogul was
considering making a bid before Friday's deadline, in hopes of
topping a bid from Parnassus Holdings II LLC, an affiliate of
private equity firm Platinum Equity. Federal-Mogul had discussions
with Delphi in the past about a bid, but never made one.
Federal-Mogul spokespeople didn't promptly return a call seeking
comment.
Delphi is set to consider its bids over the weekend, announce
qualified bidders on Monday, then hold an auction for the assets
next Friday, July 17. A Delphi spokesman repeated its statement
that "multiple parties have shown interest," but it will not
disclose who those parties are.
Justin Perras, a spokesman for JPMorgan Chase & Co. (JPM),
which is leading the syndicate of DIP lenders, declined to
comment.
Mark Barnhill, principal at Platinum Equity, repeated the firm's
prepared remarks, namely that it believes "(its) offer will be
validated as the highest and best before the court." Platinum has
previously highlighted the "nearly three years working with Delphi
and its stakeholders, under the supervision of the court, to devise
a solution that best ensures the long-term health of the business
after its emergence from Chapter 11."
Platinum has never been the only bidder, "nor even necessarily
the favored," Barnhill continued in the statement, but pointed to
"thousands of hours" of analysis and "hundreds of meetings" with
all interested parties, including former parent, bankrupt General
Motors Corp. (GMGMQ) and the United Auto Workers union.
Barnhill said it had developed a "comprehensive strategic
operating plan," and noted, "Numerous other parties have had full
and complete access to Delphi and its stakeholders, and the
opportunity to make a competing bid for this business throughout
the Company's extended stay in bankruptcy."
Federal-Mogul's decision not to bid reduces the likelihood that
billionaire investor Carl Icahn will follow fellow investing titan,
Wilbur Ross, in fashioning a large automotive supplier by buying
pieces of companies that have been financially weakened amid auto
maker production cuts. Icahn already owns more than 75% of
Federal-Mogul's stock and is providing a chunk of the
debtor-in-possession financing for Lear Corp. (LEAR), which filed
for Chapter 11 protection on Tuesday.
Speculation about a Federal-Mogul bid was fueled earlier this
month when Federal Judge Robert Drain blocked Delphi's quick sale
to private-equity firm Platinum.
The U.S. Department of Treasury is providing Delphi with $250
million in emergency financing and has made that contingent on a
sale being completed by July 23. The company is expected to run out
of cash by the end of July.
Delphi filed for bankruptcy protection in 2005 and has been
struggling to reorganize its business while also securing enough
financing to exit the process.
-By Maxwell Murphy and Jeff Bennett; Dow Jones Newswires;
212-416-2171; maxwell.murphy@dowjones.com