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Elliot Management and Silver Point's Awesome Delphi Play

The New York Posts Josh Kosman does a run down this morning on how Paul Singers Elliot Management and Silver Point Capital turned a $435 million investment in the distressed debt of the autoparts maker Delphi into an equity stake worth $1.54 billion today.

Delphi
Delphi

Perhaps even more impressively, they did this in the face of government opposition.





From the Post:

GM, the Treasury and the auto task force wanted to sell Delphi to private-equity firm Platinum Equity Partners in a $3.6 billion deal that would have nearly wiped out lenders. Under the terms, Platinum would have put up $500 million and the government would have kicked in most of the rest.

ButElliott Managementand Silver Point did an end run around the deal, buying up much of $2.9 billion worth of Delphi loans for around 15 cents on the dollar. The firms then used the debt position to block the sale to Platinum, raising the specter of a liquidation if the sale went ahead.

Through their maneuvering, they brokered a deal with the government to repossess Delphi in October 2009, by bidding the value of debt they were owed by the parts supplier. Then, Elliott Management and Silver Point went to lenders with an offer to sell their stakes in the business but demanded an 18 percent stake in the company in return for their trouble

Since then, the value of Delphi — similar to auto parts peers Magna and Dana — has more than doubled based on the trading price of Delphi units that have risen from $6,400 a share to $15,400, sources said.

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