HedgeCo.Net

New York (HedgeCo.Net) - As if trying to secure $6.1 billion in financing to exit bankruptcy isn’t enough of a headache, now Delphi has to deal with counterclaims by hedge fund Appaloosa Management who is demanding that the U.S. auto parts supplier pay them $82.5 million in fees plus expenses.

Appaloosa claims they are entitled to that money because Delphi violated the terms of their agreement.  The original agreement entailed Appaloosa heading the rescue of Delphi, offering them $2.55 billion if they secured the rest of the capital needed to exit Chapter 11.  On the last day of the deadline, Appaloosa walked away from their commitment, leaving Delphi high and dry with little alternatives.

Delphi then proceeded to sue Appaloosa, hoping to make them deliver on their promise of the much needed capital.   The hedge fund however, expressed concern on the company’s overreliance to once parent company GM, who guaranteed Delphi a $2 billion piece of their financial puzzle.

Delphi spokesperson Lindsay Williams said, “"We continue to believe that the plan investors failed to honor their commitment at the April 4 closing, causing unnecessary harm in delaying our emergence from Chapter 11. We’ll continue to pursue legal remedies in court.”

In its counterclaim, Appaloosa sates that the agreement with General Motors “violates the express terms."

Appaloosa is just one of the would-be investors who is seeking a piece of the $82.5 million.  Others include Harbinger Capital Partners, Merrill Lynch, UBS and Pardus Capital Management, who all commited to Delphi’s rescue.

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

Tags: bankrupty, brokerages, disapproval, due-diligence-service, harbinger, investment-commitments, liquidity, market-risk, mistrust, nara, party-vendors, pergam-finance, takeover, west-palm-beach

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

News Tags:No Tags

Tags: bankrupty, bastion, boston, disapproval, due-diligence-service, general-motors, harbinger, investment-commitments, mistrust, nara, pergam-finance, prison-term, raanan-agus, summer-intern, ubs-ag