Thread: Your Taxmoney at Work: GM Loans $2B for Parts Supplier

GM to help investment firm buy Delphi

According to a Wall Street Journal report, the automaker will provide $2.5 billion to the private equity firm that wants to buy bankrupt parts supplier Delphi.


NEW YORK (Reuters) -- General Motors Corp will give more than $2.5 billion of the $3.6 billion needed for Platinum Equity to gain control of bankrupt car parts supplier Delphi Corp, the Wall Street Journal said, citing a source.

Under terms of the transaction, private equity firm Platinum is expected to invest no more than $750 million and GM (GMGMQ) would provide the balance in financing, the report said Thursday, citing the source.

Terms of the GM loans could not be learned, the report added.
Platinum declined to comment. GM and Delphi were not immediately available for comment.

It was earlier reported that under the new organization plan for Delphi, Parnassus Holdings II LLC, a unit of Platinum Equity, would acquire and operate Delphi's U.S. and non-U.S. businesses with emergence capital and capital commitments totaling $3.6 billion.

At that time, a person familiar with the matter told Reuters that the $3.6 billion financing package would come from various sources including GM and Platinum, but declined to elaborate.

As part of the reorganization plan, GM has agreed to acquire five Delphi plants and its global steering business.

GM itself filed for bankruptcy protection earlier this week, the third-largest filing in U.S. history and largest ever in U.S. manufacturing.

GM earlier said a bankruptcy court judge granted approval for it to access a new $33.3 billion debtor-in-possession financing facility from the U.S. Treasury and the Canadian and Ontario governments. To top of page



http://money.cnn.com/2009/06/04/news/co ... ney_latest

DETROIT, June 5 - General Motors Corp <GM.N> said on Friday it would provide $2 billion cash plus credit to support private equity firm Platinum Equity's buyout of its bankrupt former parts unit, Delphi Corp <DPHIQ.PK>.

GM, which filed for bankruptcy on Monday, said it would acquire a Class A interest in the new company for the cash. Platinum Equity would put in $250 million cash for a Class B interest and Delphi would acquire Class C interests on behalf of junior bankruptcy financing lenders that forgive some debt.

GM and Platinum also have agreed to establish a secured term loan for the new company, with GM providing $500 million and Platinum $250 million, the automaker said in a filing with the U.S. Securities and Exchange Commission.

On Monday, Delphi said it reached a deal to sell most of its global operations to Platinum Equity, including its headquarters in Troy, Michigan, and five of its operations back to GM. Other assets would be sold or closed.

At that time, Delphi said it had emergence capital and capital commitments totaling $3.6 billion, but did not provide details. Delphi hopes to complete the deal by the end of July.

The deal could provide a final resolution for Delphi, which filed for bankruptcy in October 2005. A previous Delphi plan to emerge from bankruptcy protection in April 2007 fell through.

Supply agreements between GM and Delphi will be carried through to the end of related product programs, GM said. GM also said it would provide financing to support Delphi's operations, while the deal is completed.

The automaker said it would pay or take over $600 million of Delphi's senior debtor-in-possession credit facility, $300 million of its junior facility and $200 million of other obligations to be shared with the new company.

GM said it would waive $1.6 billion of pension costs that had been transferred from Delphi and $300 million of administrative claims when the transactions are completed.

GM also agreed to provide Delphi with a $250 million credit facility that will be waived if the deals are completed.

The plans require U.S. bankruptcy court approval.

The case is In re Delphi Corp, U.S. Bankruptcy Court, Southern District of New York, No. 05-44481.

http://sg.news.yahoo.com/rtrs/20090605/ ... 18940.html

Reminds of Chrysler using its bailout money to fund Terminator 4. I think GM went in for Transformers 2.