* Delphi buys Class A interests from GM for $3.8 bln
* Delphi buys Class C interests from PBGC for $594 mln
* News comes as Delphi laying groundwork for an IPO
* Move away from GM could attract some investors-analyst
(Adds CEO quote, IPO background, analyst quote, PBGC comment)
By Deepa Seetharaman
DETROIT, March 31 U.S. auto supplier Delphi has
bought stakes in the company held by General Motors Co (GM.N)
and the Pension Benefit Guaranty Corporation for about $4.4
billion in a bid to simplify its capital structure.
Delphi purchased Class A interests owned by GM for $3.8
billion, the company said in a release on Thursday. It also
bought the PBGC's Class C interests for $594 million.
"Based on these transactions, the company has an efficient
capital structure and a prudent level of debt," Delphi said.
Delphi's move would position the company for an initial
public offering that could come as soon as this year, people
familiar with the matter have said.
One analyst said the move away from GM would help distance
Delphi from U.S. government involvement, which could attract
some investors. GM is one-third owned by the U.S. Treasury.
"In an IPO, it looks like they're clear of ... GM, which is
still partially owned by the government," said Jim Hall,
managing director of 2953 Analytics.
Other companies in the auto sector are gearing up for their
own share offerings. Ally Financial filed for an IPO Thursday
that would allow the U.S. government to sell its majority stake
in the auto and mortgage lender. [ID:nN31218826]
Allison Transmission Holdings Inc filed paperwork with U.S.
regulators nearly two weeks ago for its own IPO of up to $750
Delphi said it funded the transactions with cash and $2.5
billion of new bank debt as part of a $3 billion credit
facility provided by JPMorgan Chase & Co (JPM.N).
"These transactions represent an important step in
positioning Delphi to continue to increase shareholder value,"
Delphi Chief Executive Rodney O'Neal said in a statement.
Delphi, spun off from GM in 1999, filed for Chapter 11
bankruptcy protection in 2005. GM and U.S. pension insurer PBGC
acquired stakes in Delphi as part of the supplier's emergence
from bankruptcy protection in 2009.
In a separate statement, GM said it will report a book gain
of about $1.6 billion in the first quarter of 2011 related to
the sale. PBGC said it did not know how this action would
Hall said Delphi still had to convince investors that it
has a unique and strong slate of products after the company
thinned its offerings during its restructuring.
But he added that Delphi's move away from GM could make its
products more attractive to other automakers, who in the past
worried that "GM always got the good stuff."
(Reporting by Deepa Seetharaman; Additional reporting by
Soyoung Kim in New Orleans, John Crawley in Washington and
Bernie Woodall in Detroit; Editing by Richard Chang)