WASHINGTON (Dow Jones/AP) -- Auto parts supplier Delphi Corp. has won court approval to sell its wheel bearings business to Kyklos Inc. for $46.2 million.
Judge Robert Drain of the U.S. Bankruptcy Court in Manhattan on Wednesday approved the sale following an auction last month.
Kyklos, a unit of Hephaestus Holdings Inc., beat out Resilience Capital's $44.2 million lead bid at last month's auction. Before the auction, Drain cleared Delphi to pay Resilience a $1.5 million breakup fee if its bid was topped at auction.
According to court papers, the purchase price can be adjusted down by $26 million if a new collective bargaining agreement with the United Auto Workers union can't be reached before the sale closes. The sale is slated to close by April 30.
Delphi's bearing business, based in Sandusky, Ohio, employs 1,000 workers -- including 775 who are represented by the UAW. In court papers, Delphi called the bearings business a ''trusted market leader'' and ''fundamentally strong,'' but said it doesn't fit into its reorganization plan. Delphi, in bankruptcy proceedings since October 2005, said it has invested more than $140 million since 2000 on new tooling, refurbishment of old equipment and new equipment at the plant.
George Thanopoulos, chief executive of Hephaestus Holdings, said the purchase of Delphi's bearing business will help it expand into the wheel bearings business and ''materially'' expand its relationship with General Motors Corp., Delphi's former parent and largest customer.
''As a result of the acquisition, (Hephaestus Holdings) will quickly become an integrated supplier of wheel bearings, similar to substantially all of the participants in the global wheel bearings industry,'' Thanopoulos said in a statement last month following the auction. Hephaestus Holdings is a portfolio company of private equity firm KPS Capital Partners LP.
Delphi aims to exit Chapter 11 protection by early April. The Troy, Mich., company is trying to raise $6.1 billion in bankruptcy-exit financing but has run into trouble amid tight credit markets. Delphi recently relaunched efforts to syndicate the loans after a GM affiliate agreed to provide a big portion of the financing, but that deal has come under fire from the group of investors who've agreed to pump about $2.55 billion into the company when it exits Chapter 11.