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New York (HedgeCo.Net) – Hedge Fund Appaloosa Management may have tried to turn their back on Delphi, but somehow they just can’t seem to get away. Ensnarled in a nasty court battle with the Michigan auto parts supplier, the judge is now reconsidering original fraud claims brought against the New Jersey based hedge fund.
Delphi had sued the investor group headed by Appaloosa that originally agreed to inject $2.55 billion into the bankrupt company that was supposed to help lift them out of Chapter 11. The investors commitment was going to provide a much needed piece of the $6.1 billion in financing that Delphi needed to secure by the April deadline. When Appaloosa walked away as the deadline neared, Delphi was left scrambling, clinging only to former parent company General Motors.
Judge Robert Drain told a Manhattan Court this week “It seems to me that I was unclear in what aspects of the allegations needed to be dealt with…I may have well been wrong.”
Drain said that when he dismissed this claim for fraud originally, he did not feel that Appaloosa made “affirmative misrepresentations” to Delphi about plans to scrap the financing deal. Now, Drain is reconsidering, saying that any failures to communicate a change of mind could very well constitute fraud.
Both parties were asked to gather more information and submit briefs on the fraud claim by the next hearing on October 21. Delphi is seeking damages from Appaloosa and a ruling that could make them deliver their original financial obligation.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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Reuters – Hedge fund manager CQS said on Thursday it had launched a new fund that will aim to profit from the volatility that has gripped global stock markets for much of the past year.
CQS, which had $9.6 billion (5.4 billion pounds) of assets under management at the start of August, said it had launched CQS Global Volatility Fund with an initial size of US$160 million.
The fund will use futures and options to trade volatility, with a primary focus on equity market indexes and on individual equities within the world’s major stock markets.
"The Fund aims to profit from valuation anomalies in equity volatility and from dislocations in markets. CQS believes that equity market volatility provides a consistent opportunity set to capture profits for investors," CQS said in a statement.
Times Online – Woolworths’ biggest shareholder has thrown his weight behind management in rejecting Malcolm Walker’s £50m takeover approach, while refusing to deny that he is planning his own bid for the struggling retailer.
Iranian property tycoon Ardeshir Naghshineh, who has built up a 10.2% stake in the firm, told The Sunday Times: “Walker is well respected but the board rejected the bid and rightly so. It’s not a good deal for Woolies or shareholders.”
Walker, founder of the Iceland frozen-food chain, has proposed a deal that would see his consortium – backed by Icelandic retail investor Baugur, also a Woolworths shareholder – take its 815 stores but leave the parent company with a near-£100m pension deficit and most of its £120m debt.
“It doesn’t leave much,” said Naghshineh. “The opportunity goes if the deal happens . . . and the liabilities are left. What is the deal for the rest of the shareholders? What are they left with?”
New York (HedgeCo.Net) – While Delphi continues its quest to secure the capital needed to exit bankruptcy, GM has announced they will increase their loan to the auto parts maker to $950 million. The extra $300 million will help Delphi maintain some liquidity throughout the process.
Delphi, who sought bankruptcy protection in October 2005, pulled together an exit strategy that included a $6.1 billion influx of capital. Hedge fund Appaloosa Management took the reins and agreed to provide $2.55 billion to help lift them out of Chapter 11.
Former parent company GM also came to the rescue and promised a whooping $2 billion piece of the puzzle. However, Appaloosa proceeded to walk away from the deal during the final days in April, leaving Delphi with no other alternatives.
Delphi took action against the hedge fund in hopes of making it deliver on the promised capital. The hedge fund bailed amidst what they thought was an increasingly risky situation. They also were concerned whether or not Delphi has an overreliance on GM.
Delphi’s next hearing is scheduled for August 26th in the U.S. Bankruptcy Court in New York. GM just reported a $15.5 billion quarterly loss, one of the largest in their history.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
New York (HedgeCo.Net) – American auto parts maker Delphi has been given the green light to proceed with their suit against hedge fund Appaloosa Management.
U.S. Bankruptcy Judge Robert Drain denied a request by Appaloosa yesterday to dismiss the fraud and breach of contract lawsuit that Delphi had waged against them. Delphi is attempting to collect the $2.55 billion that was originally promised to them by Appaloosa as part of their plan to exit Chapter 11.
While Judge Drain did disregard some of Delphi’s complaints, sources say he rejected the arguments of Appaloosa, including the one that stated the agreement with Delphi only allows for damages of up to $250 million.
The money was part of a bigger, $6.1 billion refinancing strategy that was promised to Delphi through various investors. After $2 billion was granted by former parent company General Motors, Appaloosa got weary of the deal and cited an overdependence on GM. One day before the deadline to walk away, Appaloosa did just that, even though Delphi had attained the rest of the financing needed to solidify the deal.
The lawsuit is scheduled to go to trial next year.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
New York (HedgeCo.Net) – Appaloosa Management is getting hit from all angles in their attempt to walk away from the deal they struck with Delphi. The hedge fund is not only being sued by the auto parts maker, but now creditors of Delphi Corp. are seeking to intervene on the case.
The lawsuit stems from an original agreement, led by Appaloosa, to provide Delphi with $2.55 billion in aid to help them exit Chapter 11. Though $6.1 billion was needed to make that happen, it looked as if Delphi was going to pull it together, thanks largely to a $2 billion influx of cash from former parent company, General Motors.
Appaloosa walked away from the deal at the deadline, claiming that Delphi had violated several agreements and had an over reliance on GM. Now, creditors are siding with Delphi, saying that Appaloosa walked away simply because they lost interest in the deal.
“Because of the failure to provide the agreed-upon investment financing, distributions that should have been made to creditors pursuant to the plan have not been made,” the Creditors Committee said in the court papers.
The committee said it "should have the right" to join in the lawsuit because they would have "directly benefitted" from Appaloosa’s investment.
Delphi is seeking a ruling that would force Appaloosa to deliver on their original promise.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
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.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
