WASHINGTON – A hedge fund run by billionaire investor David Tepper launched a new bid Monday to slow Delphi Corp.'s restructuring plans, asking a judge to bar the company from jettisoning its labor union agreements and its money-losing contracts with General Motors Corp.
The hedge fund, Appaloosa Management LP, said in papers filed with the U.S. Bankruptcy Court in Manhattan that Delphi hasn't yet provided evidence that its proposals are likely to benefit the company. It said Delphi's request for court approval appeared to be "premature" under the circumstances. Appaloosa, which owns about 9 percent of Delphi stock, is one of the company's biggest shareholders and a leading opponent of GM's role in Delphi's bankruptcy reorganization. It contends that GM, Delphi's biggest customer, is using its influence over the company to set itself up for a big payoff.
But Monday, Appaloosa aligned itself with GM on one matter: Delphi's request to scrap 5,472 GM contracts it says have caused it to incur "escalating losses." GM last week asked a judge to deny that request, saying the company had failed to provide documentary evidence of its need to reject those contracts. Appaloosa echoed that complaint, saying Delphi and its subsidiaries were doing to Appaloosa what they "have done to General Motors Corp." with respect to requests for documents. GM and Appaloosa have both said that Delphi is refusing to provide documents unless they file formal court objections. General Motors and Appaloosa both called Delphi's refusal "a delaying tactic." Delphi is the largest of the auto-parts companies that have tumbled into bankruptcy recently amid production cutbacks by big U.S. vehicle manufacturers. The company, along with several of its subsidiaries, filed for Chapter 11 protection last October, listing $22 billion in debt. Since then, Delphi has been negotiating with its labor unions and with GM to find ways to cut costs.
Appaloosa, which recently tried and failed to block Delphi's plan to offer early-retirement buyouts to thousands of workers, has been leading an effort to form a court-recognized committee to represent the interests of Delphi's shareholders.
Detroit News 18.4.2006
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