- The Washington Times - Tuesday, June 2, 2009

NEW YORK (AP) | Delphi Corp. said Monday that it reached a deal to sell some of its assets to a private-equity firm and emerge from bankruptcy protection.

Parnassus Holdings II LLC, an affiliate of Platinum Equity, will operate Delphi’s businesses both in the United States and abroad with about $3.6 billion in emergence capital and capital commitments.

In addition, the Troy, Mich., company’s former parent, Detroit-based General Motors Corp., will acquire some of the company’s North American plants, including its global steering business. Other “non-core” plants and assets will be sold off over time.

“GM is pleased that Delphi has agreed to move forward with plan modifications and is committed to completing these transactions through [an asset] sale if stakeholder support is not sufficient to achieve prompt confirmation of the modified plan,” GM said. “These developments represent an important step in resolving the Delphi bankruptcy and in GM’s own restructuring efforts.”

If Delphi cannot convince creditors to support the deal, it would resort to a 363 asset sale, which refers to the section of the bankruptcy code that outlines the process for an auction of assets that the court oversees.

GM filed for Chapter 11 bankruptcy protection Monday.

Delphi was a GM parts subsidiary until it was spun off as an independent supplier in 1999. The interests of the two companies remained intertwined because of GM’s dependence on parts from Delphi and Delphi’s need for financing.

The auto-parts maker has been operating under Chapter 11 protection since October 2005. It was forced to redraw its reorganization plan after a group of investors, led by the Appaloosa Management LP hedge fund, pulled out of an investment deal in April 2008.

The Appaloosa group had planned to invest up to $2.55 billion into Delphi in exchange for equity in the reorganized company. Appaloosa’s withdrawal has led to a separate lawsuit.

A final hearing on the latest deal is scheduled for July 23.

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