NEW YORK -- Billionaire turnaround financier Wilbur Ross says he has a potent weapon in his bid to build three giant auto parts companies: a debt-free balance sheet.
Ross, who made a bundle buying bankrupt steel makers, is prepared to buy up dying auto parts makers at rock-bottom prices to create a trio of megasuppliers.
The CEO of WL Ross & Co. LLC boasts a $4.5 billion war chest to finance his global auto parts venture. He plans three giant new companies -- working in safety systems, metal bending and interior trim -- whose collective size could exceed Delphi Corp.'s $26.20 billion in global original-equipment sales last year.
"We will undoubtedly make errors" while consolidating part of the industry, Ross, 68, said in an interview at his midtown Manhattan office this month. "We won't make the mistake of too much debt."
A decade of debt financing helped send nine of the auto industry's largest suppliers into bankruptcy court since 1999 and left many more with junk credit ratings. Still more debt-bloated suppliers are headed for the scrap yard if North American auto production declines.
But bargain-basement investors such as Ross then can create healthy companies by snapping up assets of failed businesses after the bankruptcy court has wiped away debt and legacy costs.
"Detroit is at a tipping point," Merrill Lynch analyst John Casesa says in a report. Delphi is in bankruptcy court. Billionaire investor Kirk Kerkorian is jockeying for position at GM and Ross' shopping binge signals that the industry is ready for a radical financial makeover.