BorgWarner and Delphi Technologies May Not Merge

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World Headquarters BorgWarner
World Headquarters Borg Warner (Photo: Borg Warner)

BorgWarner issued a statement regarding the merger with Delphi Technologies.

On March 30, 2020, BorgWarner Inc. (“BorgWarner” or “Company”), was informed that Delphi Technologies PLC, provided notice to the lenders pursuant to its Credit Agreement, dated September 7, 2017, as amended, to draw the full available amount under the revolving facility thereunder (the “Revolver Draw”), resulting in a total of $500 million outstanding under the revolving facility.

Upon receiving this information, BorgWarner sent a written notice to Delphi Technologies asserting that Delphi Technologies materially breached Section 5.1(b)(xii) of the Transaction Agreement, dated as of January 28, 2020, between BorgWarner and Delphi Technologies (the “Agreement”) as a result of Delphi Technologies effecting the Revolver Draw without BorgWarner’s prior written consent and asserting that, if such breach is not cured within 30 days, BorgWarner has the right to terminate the Agreement.

BorgWarner received a response letter from Delphi Technologies on that date disputing BorgWarner’s breach assertion on the basis that BorgWarner unreasonably withheld its consent to the Revolver Draw.

Both BorgWarner and Delphi Technologies continue to believe in the long-term strategic value of the transaction and, at this time, are still working together towards closing the transaction in the second half of 2020. There can be no assurance, however, that BorgWarner and Delphi Technologies will reach a mutually acceptable resolution or that the transaction will close.

Delphi Statement

Then Delphi responded by issuing this statement: Delphi Technologies has been taking significant steps to conserve cash given the immediate impact on our business from the coronavirus pandemic. This includes working to access government support across our operating countries, effecting temporary layoffs, moving employees to part-time schedules and pay reductions throughout the organization, disciplined inventory management and active past dues collection.

Delphi Technologies also determined it was prudent and in the best interests of the Company and its shareholders to draw down on its full $500 million revolving credit facility to best position the company to weather the current market conditions. This precaution is consistent with actions being taken by companies across all industries, regardless of whether they have immediate cash liquidity requirements.

Both companies believe that the transaction is beneficial and they will work toward trying to get a closing in the second half of 2020. At this time there really is no assurance the transaction will definitely be closed.

You can read the full statements on the BorgWarner and Delphi Technologies’ websites.


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