West Palm Beach (HedgeCo.Net) – One month after Appaloosa Management backed out of a $2.55 billion deal to help lift Delphi out of Chapter 11, the Troy auto parts supplier is suing the hedge fund for damages.
"Our efforts to emerge were seriously undermined when we failed to close because of the actions of Appaloosa and the other plan investors. We hold them accountable for the harm they have caused to Delphi and our stakeholders," Delphi’s David Sherbin said in a statement on Friday.
Appaloosa, along with other big names like Goldman Sachs, Harbinger, UBS, Merrill Lynch and Pardus, were all part of a commitment to rescue Delphi, and had planned to give the company a big chunk of the $6.1 billion needed to refinance. But as the April 5th deadline got closer, more and more issues sprung up that made it seem increasingly unlikely that the Delphi was going to close the deal.
Appaloosa continued to assure shareholders that were not going to walk away, saying that if they had wanted to, they would’ve done so by now. One day before the deadline, Appaloosa finally turned its back, saying that Delphi had breached several agreements, and were becoming too reliant on former parent company GM, who also promised a $2.8 billion piece of the puzzle.
“Delphi believes that defendants backed out of the transaction simply because they decided they did not like the economics of the deal they had agreed to, and that they never intended to close if the deal was underwater," the company said.
This lawsuit isn’t the first that Delphi has waged against Appaloosa. Earlier this year, Delphi accused management at the hedge fund of short-selling their stock, with the anticipation that they knew the exit deal would fall through.
The amount in damages that Delphi is seeking has not been disclosed.
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