DETROIT - Auto parts supplier Delphi Automotive filed to raise up to $100 million in an initial public offering, less than two years after emerging from bankruptcy.
Delphi -- a former affiliate of General Motors and still a major supplier to the top U.S. automaker -- is launching the IPO as the U.S. auto industry emerges from a punishing downturn.
Delphi Automotive PLC - which filed to sell shares on Wednesday - said proceeds from the offering will be used for general purposes, to acquire capital equipment and repay debt.
The company was formed last week as the successor to Delphi Automotive LLP. The new entity will acquire all the outstanding units of Delphi Automotive LLP immediately prior to the offering.
Delphi's S-1 filing did not include the number of shares or price range of the IPO. Typically, those details appear in later filings with the SEC.
People familiar with the matter said last week that Delphi, the No. 6 auto supplier in North America in 2010, could be valued at more than $10 billion in an IPO. One source said Delphi could command a market valuation between $12 billion and $14 billion.
Goldman Sachs and JPMorgan Chase are among the underwriters of the IPO, according to the filing. The company intends to list its shares under the symbol "DLPH."
The amount to be raised in the offering is preliminary and could change, based on market conditions and other factors, the filing said.
"This is an indication that investors feel the (auto) industry is worthy of investment consideration," said Don Luciani, a managing partner at Amherst Partners LLC, a Birmingham, Mich.-based investment banking firm. "The industry continues to search for capital, particularly now that production volumes are building. The issue now is how do we fund the growth?"
Delphi's board of directors, which includes Chief Executive Rodney O'Neal, is eligible to receive a $275,000 award after the IPO under certain conditions, according to the filing.
Delphi said the award was designed to "incentivize engagement and performance which results in a successful initial public offering."
"Assuming that the offering is priced at the midpoint of the range set forth on the cover of this prospectus, we expect the implied company value to exceed $6 billion," Delphi said in its filing with the U.S. Securities and Exchange Commission.
If the company's value does not exceed $6 billion, the directors will not receive an award.
O'Neal, who isn't compensated for his work as a director, was paid $21.1 million including salary, bonuses and stock last year, according to the filing.
Delphi exited bankruptcy in October 2009 with four classes of shares.
Lenders that include private-equity firms Elliott Management Corp. and Silver Point Capital LP bought most of the original Delphi and still hold a controlling interest after Delphi bought back stakes from GM and the Pension Benefit Guaranty Corp. in March.
Delphi paid $3.8 billion to GM and $594 million to the PBGC to buy back the stakes and simplify its ownership base.
GM's class of shares in Delphi was valued at $2.08 billion as of Dec. 31, according to Delphi's year-end financial statement.
The Class C membership interest, which was held by the PBGC, was valued by Delphi at $646 million at that time, according to the statement.
Delphi. which makes fuel-injection systems and other parts, posted first-quarter net profits of $291 million, up 35 percent from $215 million a year earlier. Revenue climbed 17 percent to $4 billion.
Last year, Delphi reported net profits of $631 million on revenue of $13.8 billion.
Delphi's Chapter 11 bankruptcy filing in October 2005 was the biggest U.S. auto-related bankruptcy at the time.
The No. 1 U.S. auto supplier when it sought court protection to reorganize, Delphi was hampered by high operating costs, uncompetitive wages and legacy benefits inherited following its spinoff from GM in 1999. It was also saddled with low- or no-margin businesses.
Since 2005, Delphi has whittled down its business and simplified its capital structure. It exited 11 businesses and streamlined its product portfolio to 33 from 119.
Delphi also cut its global headcount by 27 percent, including temporary workers. Ninety-one percent of its hourly workforce is located in "low-cost countries" and about 30 percent of its hourly employees are temporary workers, Delphi said in the filing.
Other companies in the auto sector, including Allison Transmission Holdings, are setting up their own share offerings following GM's blockbuster IPO last year. Chrysler Group LLC is also planning an IPO that could come this year or next.
GM raised $23.1 billion in a sale of common and preferred shares during its IPO in November. The shares have declined 5.2 percent from their initial offer price of $33 a share.
Fisker Automotive Inc., the startup maker of plug-in hybrid luxury sports cars, this month filed with regulators that it was raising $100 million after completing a $190 million round of financing in March. Henrik Fisker, the automaker's chief executive officer, has said that the company had enough money to execute its business plan and may start preparing for an initial share sale after it begins production.
Tesla, the maker of electric Roadster sports cars, plans to sell 5.3 million shares in a secondary offering to help fund development of a rechargeable sport-utility vehicle, according to a filing Wednesday by the Palo Alto, Calif.-based company. The shares have risen 70 percent from their initial offer price of $17 in June.
"There seems to be a lot of money chasing automotive investment again, but the question is 'How soon will that investment bear a return?' " said Eric Noble, president of The Car Lab, an industry consultancy in Orange, Calif. "That's a very tough one."
Some automakers question whether Delphi has "shaken the legacy" of being a part of old GM, and about the pace of recovery in the U.S. auto market, weakness in Europe and slowing sales growth in China, Noble said.
In 2004, GM accounted for 54 percent of Delphi's $28.6 billion revenue. No single customer accounts for more than 21 percent of Delphi's sales now, the company said in an April presentation.
U.S. auto sales may rise to 13 million this year, based on the average estimate of 18 analysts surveyed by Bloomberg in April. That would still be more than 22 percent less than the 16.8 million annual sales that was the average from 2000 to 2007, according to Autodata Corp.
Car sales in Europe have declined 12 of the last 13 months, and growth in China industry deliveries slowed to 2.8 percent in April and 6.5 percent in March after surging 32 percent last year.
"The industry has been going through a significant downturn," said Amherst's Luciani. "A lot of investors lost a lot of money and it's taken a while to feel comfortable that we're back into a period where we'll see some sustained growth. So this bodes well."
Reuters, Bloomberg and David Phillips contributed to this report