US distressed debt hedge fund Strategic Value Partners (SVP) is pushing back against Indian auto parts giant Samvardhana Motherson’s proposed $2bn takeover of Marelli, a Japanese car components supplier backed by KKR, according to a report by the Economic Times.
The standoff highlights rising tensions among creditor factions as Marelli edges closer to a Chapter 11 filing.
Motherson’s package – structured through DIP financing – would see it inject nearly $2bn, acquire Marelli’s debt at a steep discount, and take control from KKR. If accepted, Motherson would become the senior-most creditor in any bankruptcy scenario.
SVP though, which leads an international creditor group holding roughly 50% of Marelli’s $4.4bn debt, has tabled a competing recapitalisation proposal involving $690m in new equity and controversial “up-tiering” provisions. These would elevate new financing above existing debt – a tactic common in US restructurings but resisted by Marelli’s Japanese lenders, including Mizuho.
Sources say the SVP consortium has sweetened its offer in recent days in a bid to win support from previously hesitant lenders. However, a bankruptcy filing remains likely, setting the stage for a competitive overbid process, where Motherson could revise its proposal.
