Delphi gets judge’s approval to auction damper business

Delphi’s Kettering damper business had revenue of more than $100 million last year.

WASHINGTON (Dow Jones/AP) — A federal judge said auto-parts supplier Delphi Corp. can auction the assets of its Kettering, Ohio, damper business, with Tenneco Inc. serving as the lead bidder with an $18.8 million offer.

Judge Robert Drain of the U.S. Bankruptcy Court in Manhattan signed off on the auction, which Delphi is planning to conduct by April 14.

Bidders have until April 10 to submit their opening offers if they want to participate in the auction.

Drain will review the auction results at an April 30 hearing.

In court papers filed earlier this month, Delphi said the Kettering business won’t fit within the portfolio of products it plans to produce after it exits Chapter 11 protection.

The business makes shock absorbers for General Motors Corp., Delphi’s former parent and biggest customer.

Tenneco, a Lake Forest, Ill., manufacturer of automotive emission control and ride control products, has offered to open the auction with an $18.8 million bid.

Drain cleared Delphi to pay Tenneco a $565,304 breakup fee if it’s not the winning bidder at next month’s auction.

Delphi’s Kettering damper business had revenue of more than $100 million in 2007. The business employs about 420 hourly workers and about 140 salaried employees.

Tenneco has entered into a new bargaining agreement with the International Union of Electrical Workers, which represents hourly workers at the plant, and has inked a long-term supply agreement with GM to continue to supply passenger car shock and strut parts to the auto maker.

Delphi, based in Troy, Mich., is trying to exit Chapter 11 protection after struggling for months to line up $6.1 billion in financing.

An affiliate of GM has agreed to provide up to $2 billion in first-lien debt and a second-lien note of up to $825 million to make it easier for the company to syndicate the remaining portion of the financing.

Delphi, which sought Chapter 11 protection in October 2005, has until April 4 to line up the financing under a $2.55 billion equity investment deal with a group of investors led by hedge fund Appaloosa Management LP.