Delphi Buys Back Stakes From GM

Auto parts supplier Delphi Automotive LLP said last week that the company is buying back ownership stakes from General Motors Co. and the federal government for more than $4 billion.

Chief Financial Officer Dan Ammann said the move is part of GM’s commitment to strengthen and simplify its balance sheet. The transaction leaves the company in a position to go in for an initial public offering that, according to industry watchers could come in a year.
One analyst said the move away from GM would help distance Delphi from U.S. government involvement, which could attract some investors.

“In an IPO, it looks like they’re clear of … GM, which is still partially owned by the government,” said Jim Hall, managing director of 2953 Analytics.

Delphi recorded revenues of $13.8 billion and earned $1.4 billion before interest, taxes, depreciation and amortization in 2010. Apart from GM, it also bought back $594 million worth of shares owned by Pension Benefit Guaranty Corp. (“PBGC”).

GM will report a book gain of approximately $1.6 billion in the first quarter of 2011 related to the sale. Earlier this month, GM sold its Ally Financial Series A preferred stock for $1.0 billion in a registered public offering. The Ally transaction will result in a book gain of $0.3 billion to be recorded in the first quarter of 2011.

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• Delphi to expand Morocco capacity
• Delphi raises $530 million after IPO
• Saudi billionaire invests $500 million in General Motors
• Ex-Delphi executives have to pay $333,500 for bookkeeping errors
• Delphi IPO: Shares fell 3 percent on first day
• Delphi begins full production at new diesel plant in Romania
• Delphi Automotive 2011 Financial Results