Appaloosa Management Bails on Delphi Deal
Bloomberg reports parts maker Delphi's exit from bankruptcy has hit a snag. Appaloosa Management, one of the six investors working to get the former GM parts division out of Chapter 11, backed out of the deal. In the termination notice, Appaloosa claimed Delphi didn't meet the conditions of the $2.55b deal. Oh, and they asked for a $82.5m "breakup fee." It's not an entirely unexpected development; Appaloose had not been happy with GM's expanded role in the Delphi's exit strategy. They felt the automaker would have too much power as a result. When GM offered even more money to help cover Delphi's $3.8b pension fund shortfall, it was the proverbial straw/camel thing. Appaloosa indicated that they're still open to investing, but "in a capacity different than currently envisioned by the agreement."
UPDATE – General Motors released a statement on this matter: "GM is disappointed in the decision by Appaloosa and the plan investors to withdraw their support for Delphi. There has been a tremendous amount of effort and progress made to establish the foundation that would enable Delphi to emerge from Chapter 11. GM will continue to work with the involved parties to facilitate Delphi’s efforts to emerge from bankruptcy." Meanwhile, the lawyers…
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I wonder what performance based bonuses GM executives got for completing the Delphi spin-off years ago? It is now obvious that Delphi has never been truly independent of GM.