A federal bankruptcy judge has approved a financing plan between Delphi Corp. and an investor group that has pledged to pump as much as $3.4 billion into the embattled auto-parts maker.
“This is a case with the potential for truly endlessly moving parts,” said Judge Robert Drain, reported the Associated Press, calling the approval a “watershed event.”
Under the plan, affiliates of investors Appaloosa Management, Cerberus Capital Management, and Harbinger Capital Partners, as well as Merrill Lynch and UBS Securities, have the right to buy shares in a restructured Delphi for $1.4 billion to $3.4 billion, according to the AP.
The plan reportedly allows the investors to buy between 30 percent and 72 percent of the company. It is supported — but still must be approved —by both labor unions and General Motors, Delphi’s biggest customer and former owner, according to the wire service.
Delphi board members chose this offer over a $4.7 billion bid by shareholder Highland Capital Management, the AP also pointed out.
Appaloosa, an aggressive hedge fund that specializes in investments of distressed and bankrupt companies, currently owns about 9.3 percent of the company. It, along with Cerberus, would wind up with the largest stakes in Delphi, according to the report.