Mumbai: Bankrupt Dana Corporation got a $750 million private equity infusion after a US bankruptcy court granted approval of the settlement between the auto parts maker and each of the United Steel Workers (USW) and the United Auto Workers (UAW).

Judge Burton Lifland of the bankruptcy court in New York granted approval for the settlement agreements between Dana Corporation and the workers as the basis of an agreement with Centerbridge Capital Partners, LP, for a major investment in the company.

The agreement requires Dana to replace its healthcare and long-term disability obligations for retirees and union-represented employees with trusts. The auto parts maker would inject $700 million in cash and $80 million of its common stock and part of the Centerbridge investment would help to fund the trusts.

Centerbridge will make the capital infusion by buying $300 million of 4 per cent Series A convertible preferred stock and $200 million in 4 per cent Series B-1 convertible stock that isn''t acquired by any of the qualified creditors.

The judge also approved an agreement with the USW, the UAW, and Centerbridge, under which these parties will support a plan of reorganisation filed by Dana that includes both the labour settlements and the Centerbridge investment agreement.

>Dana slashed $100 million in labour costs as it pushed for the capital investment as being critical for winning plan.

All objections by the creditors and hedge fund Brandes Investment Partners LP were resolved before the hearing while Lifland rejected the last challenge from hedge fund Appaloosa Management LP.

Appaloosa, which holds 15 per cent of Dana''s common stock along with some of its pre-petition debt, is expected to continue pushing an alternative proposal based on two rights offerings, a $1.5 billion exit loan and a commitment for $750 million in equity financing.

The hedge fund challenged the plan on the ground that Dana refused to provide information that it needs to gauge the potential value available to equity holders.

The deal also calls for Dana to file a plan by 3 September, confirm it by 28 February and exit from Chapter 11 by 1 May.

Dana is a world leader in the supply of axles; driveshafts; and structural, sealing, and thermal management products; as well as genuine service parts. The company''s customer base includes virtually every major vehicle and engine manufacturer in the global automotive, commercial vehicle, and off-highway markets, which collectively produce more than 65 million vehicles annually.

Based in Toledo, Ohio, the company employs approximately 35,000 people in 28 countries and reported 2006 sales of $8.5 billion, with more than half of this revenue derived from outside the United States.

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