By K.O. Jackson, Kokomo Tribune business writer
kirven.jackson@kokomotribune.com
General Motors, once the world's largest automaker, emerged from bankruptcy Friday.
The new GM is now owned by the U.S. government, which controls 61 percent of the company.
Nevertheless, GM isn't completely out of the bankruptcy woods. It is still waiting for Delphi Corp. to emerge from the depths of its four-year bankruptcy.
GM spun off Delphi in 1999. In October 2005, the Troy, Mich., auto supplier filed for bankruptcy protection: The world's largest auto parts maker now had the largest auto-related bankruptcy in history and the 11th largest bankruptcy ever.
Friday was also the deadline for companies to submit bids to purchase Delphi's assets.
Several companies expressed interest - particularly Federal-Mogul Corp. and TRW Automotive - but only the California equity firm Platinum Equity LLC submitted a bid.
Founded in 1995, Platinum's history is buying non-core industrial businesses, and among its more than 100 assets are a newspaper, the San Diego Union-Tribune, and a crane rental company, Maxim Crane Works Holding Inc.
Last month, Platinum discussed with Delphi, GM, and the Obama administration task force the logistics of acquiring Delphi.
A $3.6 billion deal was reached, with GM providing $2.5 billion - most of it U.S. government-loaned money - to finance the deal. Platinum's contribution is $500 million.
In addition, for four Delphi plants - including Kokomo's Electronic and Safety - GM assumes $1.1 billion of Delphi's debt and will not seek repayment of $1.6 billion in Delphi pension claims.
Unless ordered by the court, there are no plans for GM to abandon plans for the four plants and Delphi's global steering business, said GM spokeswoman Julie Gibson.
"We are moving ahead with our agreement with them," she said.
An automotive analyst said with GM focusing on its four core brands - Chevrolet, Buick, Cadillac and GMC - parts from Delphi's four plants will be imperative to both companies' future success.
"I think as soon as [GM] can start production they will. That's good for both businesses," said David Cole of the Ann Arbor Mich.-based Center for Automotive Research. "GM's bankruptcy went through quickly. They haven't compromised their product. The parts Delphi makes are very critical to GM. They are very important. That's why GM took them back. That has to be good news for the Kokomo operation."
GM gets four Delphi plants and Platinum's affiliate, Parnassus Holdings II LLC, will acquire much of Delphi's U.S. and foreign operations.
Since GM emergence from bankruptcy is good news for Delphi, all that's needed now is for Platinum's bid on Delphi's assets to be chosen July 17 and for the bankruptcy court to approve the asset sale on July 23.
"We are confident Platinum Equity's proposal will be validated as the best and most comprehensive solution to ensure the long-term health of Delphi," said Mark Barnhill, principal at Platinum Equity. "Our proposal is designed to result in a healthy and well-capitalized Delphi that will survive as a long-term, extremely stable supplier to GM and Delphi's many other automotive customers.
"Platinum's proposal is the best solution for Delphi and all of its stakeholders as well as GM and the broader automotive industry."
Until an official bidder is selected and a bid accepted, Delphi remains in bankruptcy, but Delphi officials are pleased old GM has become the new GM.
"GM is an important customer for Delphi," said Lindsey C. Williams, director of Delphi's corporate communications. "News of their emergence from Chapter 11 reorganization is a significant development for the company and the industry. We continue to work on the final elements of Delphi's Chapter 11 proceedings with a final approval hearing scheduled on July 23."