May 6, 2020 / 5:01 AM / a month ago

BorgWarner investors seek details on Delphi deal, tornado damage

May 6 (Reuters) - While the coronavirus pandemic has hit BorgWarner Inc hard, investors want to know more about the status of its pending acquisition of Delphi Technologies Plc and tornado damage at the auto parts supplier's South Carolina plant when it reports first-quarter results on Wednesday.

The fate of the deal to buy UK-based Delphi was thrown into question on March 31 when BorgWarner threatened to walk away after Delphi drew down on a credit line without BorgWarner's approval. The January deal valued Delphi at $3.3 billion.

Delphi tapped its $500 million revolving credit facility to help it weather the hit from the coronavirus outbreak, and BorgWarner said that breached the deal terms.

Delphi disputed there was a breach and said BorgWarner had "unreasonably" withheld its approval. After a 30-day period to address the issue expired last week, the companies said they hoped to negotiate a solution and were still targeting to close the deal in the second half of 2020.

The acquisition, BorgWarner's biggest in at least a decade, is meant to add Delphi's expertise in power electronics and expand BorgWarner's portfolio as the auto industry makes a wider range of vehicles that focus on clean technology.

In March, BorgWarner suspended its manufacturing operations at certain plants in response to the shutdown of auto production in Europe and North America due to the COVID-19 outbreak. As of March 20, it had liquidity of $2.3 billion, including $820 million in cash.

Investors also want to hear more about the extensive damage caused by a tornado on April 13 at BorgWarner's Seneca, South Carolina, plant. The plant, which makes transfer cases and all-wheel-drive components, was not operating at the time due to the coronavirus shutdown.

The Auburn Hills, Michigan-based company has said it is assessing the damage, but pictures in local media have shown the plant's support beams exposed after the roof was peeled off, missing walls, piles of twisted metal and destroyed trailers that had been loaded with parts.

BorgWarner has said insurance is expected to cover repair or replacement of the plant, as well as replacement of lost profits.

Ford Motor Co previously warned that production of high-priced versions of its pickups and SUVs could be hurt due to damage at the BorgWarner factory. That facility makes transfer cases for some of Ford's most profitable vehicles, such as four wheel-drive large F-series pickups and large SUVs. (Reporting by Ben Klayman; Editing by Steve Orlofsky)

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