Delphi Should Shun Bankruptcy: CEO

Meanwhile, veteran turnaround specialist Wilbur Ross reportedly might be interested in buying the ailing auto-parts maker.
Stephen TaubSeptember 21, 2005

Delphi Corp. chairman and chief executive Robert S. Miller says he’s determined to avoid bankruptcy. “Not going into Chapter 11 is much to be preferred,” the turnaround specialist told The Wall Street Journal.

Miller is credited for his work involving high-profile restructurings and bankruptcy filings at Bethlehem Steel Corp. and Federal-Mogul Corp., the paper noted. “I have been through financial stress situations where we succeeded in keeping the company out of bankruptcy,” he told the paper. “I have been through financial stress situations where we use Chapter 11 as a process to deal with it. It is simpler, cheaper, quicker to avoid it, whereas the Chapter 11 process takes longer, costs more and has a lot of aggravation that goes with it.”

On Wednesday, responding to market rumors, Delphi stated in a regulatory filing that it has not drawn the remaining $300 million under its $1.8 billion revolving credit facility. The company previously disclosed that in August it drew down $1.5 billion under the facility.

On Tuesday, a published report had said the company was looking for participants for debtor-in-possession financing, the Journal noted.

Miller wouldn’t comment on possible postbankruptcy funding, telling the paper, “I won’t discuss our financing activities. But I have been pretty blunt in saying, however, that if we choose the Chapter 11 process we would be very well organized, very well financed and to that end we are doing all necessary contingency planning. But we are also spending enormous time trying to find an out-of-court solution with GM and the unions.”

Meanwhile, The Buffalo News reported that veteran turnaround specialist and billionaire Wilbur Ross says he might be interested in buying Delphi. Ross’s International Steel Group bought Bethlehem’s assets in a $1.9 billion deal with then-Bethlehem CEO Miller, the current Delphi chairman, the paper noted. The two men kept some plants operating but pared jobs and retiree payments, the paper pointed out.

The thought now is that Ross might deploy a similar strategy at Delphi, which has 4,000 employees. “I think [Ross] will be a big concern for employees,” David Cole, chairman of the Center for Automotive Research in Ann Arbor, Michigan, told the Buffalo newspaper. “Who would you rather deal with? The leadership you know or the financial guy you don’t know?”