Delphi defends sale to Platinum
Bankrupt auto parts maker Delphi Corp. defended its proposed sale to Beverly Hills-based private equity firm Platinum Equity on Thursday, saying claims that the transaction was a sweetheart deal were unfounded.
In a filing with the U.S. Bankruptcy Court in Manhattan, Delphi Chief Financial Officer John Sheehan fired back at criticism from Delphi’s creditors, who say the $3.6-billion deal between the two companies had been covertly brokered. The deal has the backing of the U.S. government and General Motors Corp., which is Delphi’s largest customer.
Sheehan said Delphi had openly welcomed bids since it entered bankruptcy four years ago and had kept creditors informed of developments.
The creditors, who are owed more than $3.25 billion, contend that the company never seriously pursued other offers that may have led to a higher bid.
Sheehan said in the filing: “The automotive industry has evolved and changed during the past year in ways that were previously unthinkable, and I believe that Platinum has assembled the necessary financial and operational skills to lead Delphi in the future.”
He detailed the discussions with the U.S. government and traced Delphi’s failing finances and need for capital, which creditors were unwilling to provide. The filing also includes a reimbursement motion, under which Delphi would pay Platinum $30 million for due-diligence costs.
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