MarketWatch – A hedge fund seeking an official voice for shareholders in Delphi Corp.’s (DPHIQ) bankruptcy case told a federal judge Tuesday the company was using old financial data that make its prospects look artificially dire.
Appaloosa Management L.P., one of Delphi’s largest shareholders with about 9% of its stock, has asked the auto parts maker to move ahead with a canceled shareholder meeting and on Tuesday was seeking appointment of an official committee to represent stockholders. Appaloosa contends there will be money left over for shareholders, despite Delphi’s dire projections.
An expert hired by Appaloosa says Delphi is using data going back to the summer of 2005 and newer data indicate Delphi will have 2006 EBITDA of $100 million and an equity value of up to $6 billion, once it cuts labor and retiree costs through its reorganization. The investment fund is headed by former Goldman Sachs Group executive David Tepper.
Delphi, for its part, says an equity committee isn’t warranted because it is hopelessly insolvent – noting its unsecured debt trades at between 40 cents to 70 cents on the dollar – and shareholders don’t have a chance of a recovery. The company filed for Chapter 11 in October 2005. Its January monthly operating report filed with the U.S. Bankruptcy Court in Manhattan listed assets of $13.8 billion and liabilities of $20.2 billion.
