Riding Out of Bankruptcy to an IPO

Delphi CFO Kevin Clark simplified the capital structure, repurchased shares and enhanced reporting.

No doubt some career counselors would say Kevin Clark, 49, made a good move in 1994, when he left his first job working in the finance department of Chrysler to take a treasury post at auto supplier Federal Mogul, eventually moving on to become CFO at Fisher Scientific and then a founding partner at a private equity firm, Liberty Lane Partners. 

But Clark, who’s now back in the auto industry as CFO of Troy, Mich.-based Delphi, says his experience at Chrysler was a terrific introduction to finance and his current Rust Belt industry post is an exciting challenge.

“Like a lot of folks growing up in Michigan, I was surrounded by the auto industry,” Clark says. “When I finished B-School, Chrysler had gone through a government rescue and was on the upswing. It was a great opportunity. They were interested in getting kids with a finance background, and identified people they thought were high potential and cycled us through different parts of the organization.”  

The stint at Chrysler was valuable experience that prepared Clark for his later roles, including his current position with a major auto parts supplier. “When I left Chrysler, I never imagined finding myself back in the industry, but this was something I couldn’t pass up,” he says.

When Clark signed on as Delphi’s CFO in 2010, the company, with $14 billion in sales, had just left bankruptcy, and was preparing for an IPO, which it registered in May of this year.

“My challenges coming into the job were obvious,” he says. “For example, I saw a need for increased visibility and financial rigor around the allocation of capital and related rates of return by existing and future product lines. We knew which businesses were contributing and which were not, but not as well as we could know.” 

Then there was the planned IPO. “That called for simplifying the capital structure and repurchasing shares,” Clark notes. “We had three classes of stock. We used cash, bank and high-yield debt to repurchase the A and C shares, making the IPO easier.”  

Clark has moved Delphi from a $3 billion cash position when he joined in 2010 to $1.5 billion in cash and $2.5 billion in debt on the balance sheet currently.

Once the company emerged from bankruptcy, it began issuing quarterly reports to shareholders, as if it were public, in anticipation of the coming IPO. Clark says he worked to enhance that reporting, “to get us into the groove” of being a public company, an effort where his experience as CFO of publicly traded Fisher Scientific came into play.

Looking forward, Clark says he’s focusing on helping Delphi expand through internal growth and strategic acquisitions and establishing a cost structure that allows the company, whose fortunes are closely linked to the performance of the auto industry, to “maintain a strong cash flow position and profitability in all parts of the auto cycle.”  

Currently, Delphi sells only about 10% of its products outside the automobile industry. While the company will continue to be tied primarily to the auto industry, Clark says one goal of the acquisition campaign is to expand into the commercial vehicle space and other transportation areas.



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