Dana Corporation (OTC:DCNAQ) said Friday that it has reached an agreement with its unions and secured $750 million to help it exit Chapter 11 bankruptcy. The bankrupt auto parts maker announced that its unions have agreed to back a reorganization plan that includes labor settlements and funding commitments.

The union agreement would replace the company's healthcare and long-term disability obligations for retirees and union employees with trusts to which the company would contribute $700 million in cash and $80 million in stock. This change is expected to save the company more than $100 million per year.

Now that agreements have been reached with its unions, investors are beginning to see the light at the end of the tunnel. Centerbridge Capital Partners and its affiliates have agreed to purchase $500 million in convertible stock and facilitate an additional $250 million in funding from others. Many now believe that the company is on track to have a reorganization plan in place by September and be able to emerge from bankruptcy by the end of the year.

So, what does this mean for shareholders? Well, the fate of existing shareholders remains uncertain. While the company's assets outnumbered its liabilities as it entered bankruptcy (suggesting that common stock still had value), there are costs associated with the reorganization itself that may push down value further. Until these costs are fully detailed, it's hard to say whether or not the current common stock is worth anything.

Investors looking for bankruptcy investing opportunities may find this stock interesting. New stock in a company that has just emerged from bankruptcy is often undervalued. This is simply because the holders of this stock are often debtors that want nothing more to do with the company. Obviously, people are also skeptical as to whether or not the company can turn itself around after having already burned shareholders once. This deep value can translate to healthy profits in the event that the company is successful in turning itself around.

The healthy M&A market for automakers and auto parts makers is also something that is worth noting. Many private equity firms have already taken advantage of companies fresh out of bankruptcy court as their stock is often traded at a substantial discount while most of their large debts have been satisfied. The best examples of these transactions occurred in the airlines industry a few years ago.

Combined, Dana Corporation is definitely a company worth watching as it emerges from bankruptcy. While investment in its bankrupt shares may be a risky bet, investors may find an appetite for newly issued post-bankruptcy shares as they will likely be undervalued.

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