Delphi Automotive files for IPO to raise up to $100 million

Article by Christian Andrei, on May 25, 2011

As the U.S. auto industry is recovering from the economic crisis, Delphi Automotive is launching an initial public offering to raise up to $100 million. Auto parts supplier Delphi is formerly an affiliate of General Motors and remains to be a major supplier for the carmaker.

According to Delphi’s filing, the underwriters of the IPO include Goldman Sachs and JPMorgan Chase. Delphi plans for its shares to be listed under the symbol "DLPH."

The amount that Dephi intends to raise in the offering is preliminary and could still change. The filing also states that Delphi's board of directors, including Chief Executive Rodney O'Neal, is eligible to get a $275,000 award after the IPO under certain conditions.

This cash incentive will only be paid if its implied company value is higher than $6 billion at the time of the IPO. The directors won’t get an award if Delphi’s value fails to surpass $6 billion. When Delphi emerged from bankruptcy in October 2009, it had four classes of shares.

Majority of the original Delphi was bought by lenders, which include private-equity firms Elliott Management Corp. and Silver Point Capital LP. The lenders continue to hold a controlling interest after Delphi bought back stakes from GM and the Pension Benefit Guaranty Corp. last March.

For these shares, Delphi paid $3.8 billion to GM and $594 million to the PBGC. It also meant to simplify its ownership base.

According to Delphi's year-end financial statement, GM's class of shares in Delphi was valued at $2.08 billion as of Dec. 31. This statement also revealed that Delphi valued the Class C membership interest, which the PBGC held, was at $646 million back then.

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