DETROIT -- A group of Delphi Corp. stockholders led by billionaire David Tepper has hired financial advisers to explore a "potential restructuring, acquisition or other transaction involving Delphi."
Tepper's hedge fund, Appaloosa Management LP, and Harbinger Capital Partners Master Fund I Ltd. have hired UBS Securities LLC and Merrill Lynch & Co. to assist in structuring and finding financing for any possible deal. A hedge fund is a speculative, largely unregulated investment fund used by the wealthy to make high-risk and potentially high-return investments.
The funds' managers agreed not to disclose sensitive operating and financial information that Delphi Corp., of Troy, Mich., might provide as part of the analysis, according to a filing on Tuesday, Aug. 1, with the U.S. Securities and Exchange Commission.
Appaloosa bought 52 million Delphi shares soon after the company put its U.S. operations in Chapter 11 reorganization on Oct. 8, 2005.
Though equity stakeholders typically have their investments wiped out after bankruptcy debts are paid, Tepper said this year that Delphi would retain value because of its profitable overseas operations.
Delphi's debts are mounting. General Motors is expected to make about $5 billion in unsecured claims against Delphi for the cost of post-retirement health care benefits from about 12,500 Delphi workers who took incentives to retire from Delphi as GM employees.
The claims, opposed by Tepper and other creditors, could leave little money for Delphi stockholders if the bankruptcy court approves them. GM would be Delphi's largest creditor and could become its dominant stockholder if the debt eventually is converted to stock when Delphi comes out of Chapter 11.
Delphi spokeswoman Claudia Piccinin declined to comment on the specifics of Tepper's filings.
In related news, Delphi said Monday, July 31, that it had a net loss of $1.86 billion in June, including a $1.56 billion charge for pension and other benefits related to buyouts of unionized U.S. workers.
Excluding the charges, the operating loss was about $290 million, slightly higher than the $277 million operating loss in May.
Delphi intends to emerge from Chapter 11 in 2007. Delphi and its six unions, led by the UAW, are at loggerheads on wage and benefit cuts of 60 percent demanded by Delphi as part of a restructuring of its U.S. operations. A hearing is scheduled Aug. 11 on Delphi's bid to terminate its labor agreements.
You may e-mail Dave Barkholz at [email protected]