Auto-parts supplier Delphi reached a deal with its lenders and former parent company General Motors over a new plan that would lift the company out of bankruptcy, the New York Times reports, citing people briefed on the matter. The agreement was reached early Thursday, ahead of a deadline Friday for a bid from the lenders. The agreement supersedes a deal that Delphi and GM had reached with private-equity firm Platinum Equity, which had agreed to take over most of Delphi's assets, the Times reports. If the deal is approved by the Federal Bankruptcy Court in Manhattan, Delphi would emerge from bankruptcy after nearly four years. The Times reports that Delphi's debtors-in-possession lenders would forgive the $3.5 billion they are owed in exchange for taking over the majority of the company. GM would pay about $3 billion to take back four North American factories and Delphi's steering business, including $1.75 billion to finance Delphi's ongoing operations. The lenders would bring in a team of turnaround experts and ex-Delphi executives to oversee the company's restructuring and operations. Delphi's new proposal is similar to its agreement with Platinum, which was announced June 1, the day GM filed for bankruptcy, the Times notes. But hundreds of objectors, including the DIP lenders, derided that proposal as a "sweetheart deal" that gave the private-equity firm control of Delphi for $250 million and a $250 million credit line. Platinum said it remained confident it would have the strongest bid when terms are reviewed by Delphi on Friday, according to Reuters.
"We expect Delphi and General Motors to support the highest and best offer to emerge from that auction, provided the winning bidder meets certain requirements to ensure that Delphi continues to operate as a stable, long-term supplier to GM and other global automotive customers," Platinum principal Mark Barnhill said in a statement, Reuters reports.