U.S. Sells All Remaining Shares of General Motors
Delphi Automotive Said to Move Ahead With Its $550 Million IPO This Month
Delphi Automotive Plc, the former parts unit of General Motors Co. (GM), plans to set terms for its initial public offering by tomorrow and begin pitching to investors next week, two people familiar with the sale said.
Troy, Michigan-based Delphi will seek $550 million in the IPO, said the people, who asked not to be identified because the plans are private. Shares will probably begin trading Nov. 17, one of the people said. The company had planned to raise more than $1 billion, a person with knowledge of the offering said in May.
Delphi is moving ahead with its IPO amid the turbulence in the global markets and automobile industry that caused billionaire Wilbur Ross in September to delay the offering of his International Automotive Components Group until at least January. IPOs totaling $8.9 billion were canceled or postponed in the third quarter and $34 billion for the first nine months.
“The pool of cash is dwindling, so you might as well strike now while the iron is warm,” said Jim Hall, a principal of 2953 Analytics Inc., a consulting firm in Birmingham, Michigan.
Delphi, once the largest U.S. auto-parts maker, exited bankruptcy in October 2009. Delphi has since become more profitable, reduced its dependence on its former parent and expanded in fast-growing emerging markets. The offering will be priced on Nov. 16, one of the people said.
GM, Tesla IPOs
The company has benefited from the recovery in the U.S. auto industry, highlighted by last year’s IPOs of GM and Tesla Motors Inc. (TSLA), the first U.S. automakers to go public in more than 50 years. Market turmoil has driven down GM 37 percent this year before today while Ford Motor Co. (F) has fallen 34 percent.
Delphi, which seeks to trade under the symbol “DLPH,” exited bankruptcy with four classes of shares. It bought back stakes from GM and the Pension Benefit Guaranty Corp. in March. Lenders including private-equity firms Elliott Management Corp. and Silver Point Capital LP bought most of the original Delphi and still hold a controlling interest. Delphi is registered in Gillingham, U.K.
The offering’s proceeds will be used for general purposes, retiring debt and capital spending, Delphi said in May.
The maker of fuel-injection systems and other parts said profit in the three months that ended Sept. 30 more than doubled to $266 million from a year earlier as it lowered costs. Selling, general and administrative expenses as a percent of sales fell to 5.65 percent in the quarter, from 6.26 percent a year earlier, Delphi said in a filing this week.
Revenue climbed 19 percent to $3.93 billion in the third quarter. Delphi reported profit of $631 million last year on revenue of $13.8 billion. Sales this year will be $14.5 billion to $15 billion, the company said May 10. The company has 91 percent of its hourly workers in low-cost countries.
Delphi’s Chapter 11 filing in October 2005 was the biggest U.S. auto-related bankruptcy at that time. Lenders including New York-based Elliott and Greenwich, Connecticut-based Silver Point won an auction for Delphi in July 2009 by bidding the value of debt they were owed by the parts supplier. The loans totaled $3.3 billion, according to court documents.
The underwriters include Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co., Bank of America Corp.’s Merrill Lynch, Barclays Plc, Citigroup Inc. (C), Deutsche Bank AG, Morgan Stanley, Credit Suisse Group AG, Lazard Ltd. and UBS AG.
In 2004, purchases by GM accounted for 54 percent of Delphi’s $28.6 billion revenue. No single customer accounts for more than 21 percent of Delphi’s sales now, the company said in an April presentation.
U.S. auto sales may rise about 9.5 percent to 12.7 million this year, the average estimate of 18 analysts surveyed by Bloomberg in August. The U.S. averaged annual sales of 16.8 million vehicles from 2000 to 2007, according to Woodcliff Lake, New Jersey-based Autodata Corp.
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