By Don Shilling
The future of local Packard operations will soon be in the hands of creditors.
The future of Delphi Packard Electric’s local plants remains in question as its parent company nears the end of a four-year bankruptcy.
Creditors of Delphi Corp. appear poised to control most of the auto supplier’s operations, but it’s unclear what they will do with the local plants.
The creditors could choose to sell Delphi’s plants rather than operate them, said Bob Sutton of Austintown, a staff representative for the International Union of Electrical Workers. If that happens, future operations would be up to the buyer.
“It’s a juggling act, and the balls are up in the air,” Sutton said.
Tom Humphries, president of the Youngstown/Warren Regional Chamber, said he hopes Packard will survive the transition because he has heard unofficially that Packard is one of Delphi’s most profitable divisions.
“I still think it’s a big asset and would command a high dollar. But I’m not sure they are motivated to dispose of the unit, so I hope they keep it intact and part of the portfolio,” he said.
After Delphi filed for bankruptcy in 2005, it sold or closed some of its money-losing operations. Packard, which is based in Warren but makes wiring systems all over the world, was among the operations that were retained, although local operations have been greatly reduced.
Sutton said the union had been preparing to work under Platinum Equity, a California investment company that earlier had reached a deal with Delphi and its former parent company, General Motors.
Late Monday, however, Delphi announced that a group of Delphi creditors, led by JPMorgan Chase Bank, had been selected as the preferred bidder.
The creditors had complained about the Platinum bid because they didn’t think they would be compensated adequately for holding Delphi’s debt.
Sutton said he thinks the creditors would have to honor the contract with IUE Local 717. A judge in bankruptcy court in New York scheduled a hearing today to discuss the creditors’ bid.
A similar situation occurred in the recent bankruptcy of the former WCI Steel in Warren. That company’s creditors fought for control of the mill and won. Once they brought it out of bankruptcy, however, they sold the mill to Severstal, a worldwide steelmaker based in Russia.
Severstal said it planned to upgrade the mill but was forced to shut down steel-making operations last fall because of the recession. It said the shutdown is temporary.
Delphi said Monday that it concluded a two-day auction of its assets and determined that the creditors offered the best bid. The Associated Press reported the creditors would forgive $3.45 billion in debt owed by Delphi.
Delphi said the creditors’ offer is similar to the one from Platinum Equity, which included billions of dollars in aid from GM.
In return, GM was to receive some Delphi operations, such as its steering business, that it deemed critical to its operations.
The deal with Platinum Equity is now deemed an “alternate transaction” behind the creditors bid, Delphi said.
Platinum said it is continuing discussions with Delphi in advance of today’s court hearing.
“We look forward to working on the next phase of this process with Delphi, its lenders and General Motors — all of whom have acknowledged the value of Platinum Equity’s operating expertise,” Platinum said.
Sutton from the IUE said it’s possible Platinum could buy Delphi plants from the creditors.
Locally, Packard employed 3,800 hourly workers when it filed for bankruptcy. That has been slashed to about 700.
Packard also had about 1,200 salaried employees in the area in 2005. That number also has been reduced, but Packard is not disclosing the new number.