Judge OKs Sale of Delphi Brake Plant: TRW Deal Gives Saginaw Facility New Life

Delphi Corp. won a judge's approval Thursday to sell its chassis business to a division of TRW Automotive Holdings Corp., breathing new life into a Delphi brake parts plant in Saginaw, MI, that this time last year faced the prospect of closure. The sale makes good on a promise made in June, in Delphi's contract with the UAW, to keep that plant running by teaming up with Delphi's former owner General Motors Corp. to find a buyer. It also brings the Saginaw plant, with 670 hourly workers, into a company that has kept its head above water during the industry's challenging times.

From Detroit Free Press

NEW YORK — Delphi Corp. won a judge’s approval Thursday to sell its chassis business to a division of TRW Automotive Holdings Corp., breathing new life into a Delphi brake parts plant in Saginaw, MI, that this time last year faced the prospect of closure.

The sale makes good on a promise made in June, in Delphi’s contract with the UAW, to keep that plant running by teaming up with Delphi’s former owner General Motors Corp. to find a buyer. It also brings the Saginaw plant, with 670 hourly workers, into a company that has kept its head above water during the industry’s challenging times.

Jim Hurren, president of UAW Local 467, which represents workers at the Saginaw plant, said the sale was the best possible scenario for the plant. "They want to be in the brake business," said Hurren, who credited his members, most of whom have only a year’s seniority, with catching on quickly and working hard to attract a new owner. "We’ve got a good workforce," he said.

Approval of the sale came from U.S. Bankruptcy Judge Robert Drain, who on Thursday is to take up the next key decision in Delphi’s case: whether to approve the company’s bankruptcy plan so creditors can vote on it.

The plan has been amended twice in part to lower the company’s debt and make it easier to secure an exit loan when investment banks, which have lost billions in the mortgage market, have tightened their lending. The plan will be amended a third time before next week’s hearing, said Delphi’s lead attorney, Jack Butler.

The earlier changes to the plan have angered other stakeholders in the bankruptcy, including unsecured creditors, who say the company has shifted too much of its value upon bankruptcy emergence to private equity and investment firms willing to invest up to $2.55 billion in the company.

Delphi’s chassis business is one of several segments the Troy-based supplier has sold or is trying to sell during its bankruptcy to narrow its focus in the auto industry. Two other upcoming sales include its steering business and its interiors business.

Under the agreement with TRW, the new owner will lease most of the Saginaw plant, and has bought machinery, inventory and contracts for braking systems from Delphi for $42.6 million. Delphi received no competing bids for the business, which recorded $925 million in revenue last year. The deal is expected to close early next year.

TRW became the leading candidate for the business last year when GM moved its contracts for brake and axle components from Delphi to TRW, while Delphi was deciding which businesses to exit during its Chapter 11 reorganization.

TRW’s diverse customer base has been credited with keeping the company profitable since 2004.

GM has been TRW’s fourth-largest customer, accounting for 11 percent of sales, behind the former DaimlerChrysler AG, Ford Motor Co. and Volkswagen AG.

TRW, 47 percent of which is owned by the Blackstone Group LP, reported $13.1 billion in sales last year with more than 20 percent of that coming from its braking business.