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Platinum Equity could face rival in quest to acquire Delphi Corp.

The Beverly Hills investment firm had been the only bidder for the bankrupt auto parts maker, but a group of Delphi's lenders says it will make its own offer. An auction set for today is delayed.

July 18, 2009|Martin Zimmerman

Beverly Hills investment firm Platinum Equity won't find out until next week whether it is the only bidder for bankrupt auto parts maker Delphi Corp.

U.S. Bankruptcy Judge Robert Drain, who is overseeing Delphi's Chapter 11 bankruptcy, was scheduled to conduct an auction Friday to sell the company's assets, but postponed it until Tuesday.

Platinum currently has the only bid on the table for Delphi, one of the world's biggest auto parts makers and a key supplier to General Motors Co.

However, a group of Delphi's bankruptcy lenders said in a court filing this week that they planned to submit a "credit bid," which would involve forgiving their debts to Delphi in return for acquiring its assets. Various lenders have provided almost $3.5 billion in financing to Delphi since it filed for bankruptcy in October 2006.

The lenders have objected to the Platinum bid, saying the deal would provide big returns for the investment firm while they would recoup, at best, only 20 cents on the dollar.

In their filing this week, the lenders said they had put together a management team to run Delphi and were prepared to implement a business plan. The lenders also warned that they would pursue a foreclosure sale of Delphi's assets if their credit bid failed.

Much of Platinum's proposed $3.6-billion acquisition of Delphi would be financed by GM, which also would acquire several of Delphi's North American plants and assume some of its pension obligations. Platinum has said it would put up $250 million in cash when the deal closes and put another $250 million in a fund that Delphi could draw on as needed.

"We have an offer on the table that provides fair value for the credit claims and the necessary liquidity, operational resources and strategic operating plan for Delphi to emerge successfully from bankruptcy," Platinum said Friday.

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