Platinum Equity, the Beverly Hills investment firm, is hitting a few speed bumps in its quest to buy bankrupt auto parts maker Delphi Corp.
The proposed $3.6-billion acquisition has the backing of Delphi's former owner and largest customer, General Motors Corp., as well as the federal government. But opposition from some of Delphi's creditors has raised the possibility that other bidders may emerge to challenge Platinum.
Whether these head winds combine to scuttle the deal won't be known for at least a month. The judge in Delphi's Chapter 11 bankruptcy case has scheduled a July 23 hearing, at which he could approve the company's reorganization plan and approve a new owner.
Platinum's deal to acquire Delphi was announced June 1, the same day that GM filed for Chapter 11 bankruptcy protection.
Failing to snag Delphi would be an unwelcome setback for Platinum, which specializes in acquiring distressed companies. With big pieces of the U.S. economy in shambles, Platinum and its chief executive, 44-year-old billionaire Tom Gores, have had plenty of rubble to pick through lately.
Not including Delphi, Platinum has launched or completed deals to acquire half a dozen companies this year in industries including computers, commercial real estate services and garbage equipment.
The firm displayed a genuine taste for risk, however, when it waded into the troubled newspaper business with its March purchase of the San Diego Union-Tribune.
Its proposal to buy Delphi seems equally bold because the company has been operating under bankruptcy protection for almost four years and depends on an auto industry that is suffering its worst sales slump in decades.
"You tend to find us in markets that are facing the most amount of distress at any given time," Platinum Principal Mark Barnhill said last week. "So what are we looking at now? We're looking at a lot of newspapers and we're looking at a lot of automotive companies."
Platinum's spurt of deal-making comes as the private equity industry in general has fallen dramatically from its recent heights.
Announced private equity deals dropped 60% last year compared with 2007, to $211 billion, according to Bloomberg News data.
The poor environment didn't prevent Platinum from raising $2.75 billion in September for a new leveraged buyout fund -- $1.25 billion more than planned.
