Delphi Automotive LLP, Troy, Mich., bought back the stake in the auto parts maker held by the PBGC for $594 million and the interest owned by General Motors Co. for $3.8 billion, according to a statement Thursday from Delphi.
Delphi funded the buybacks with cash on the company's balance sheet and $2.5 billion of new bank debt as part of a $3 billion credit facility provided by J.P. Morgan Securities. It “fully retires the ownership shares acquired by GM and the PBGC in connection with Delphi's acquisition by a group of private investors in October 2009,” the statement said.
Delphi Automotive LLP was created in October 2009 when a group of private investors acquired certain assets of the former Delphi Corp.
“PBGC originally obtained its interest in Delphi Automotive in partial settlement of its claims stemming from the 2009 termination of pension plans” of Delphi Corp., which had filed for Chapter 11 bankruptcy protection, according to a statement from the Pension Benefit Guaranty Corp.
“The Delphi pension plans were underfunded by about $7 billion and PBGC has taken responsibility for $6.1 billion, making it the second largest financial loss in the agency's 36-year history,” the PBGC said.
PBGC said it didn't know how the buyback would affect benefits. “PBGC will inform Delphi retirees of their final benefit amount as soon as the complex calculation process is complete.”
Detroit-based GM “will report a book gain of approximately $1.6 billion in the first quarter of 2011 related to the sale,” according to a GM statement.
GM acquired its interests in October 2009 in conjunction with the creation of Delphi Automotive, the GM statement said.