By Liz White, UT editor
Troy, Michigan-Delphi Corp. said 18 Dec that various financial groups are investing up to $3400 million to buy a stake in the bankrupt automotive supplier.
The cash will support Delphi's plan of reorganisation to exit bankruptcy protection, filed 18 Dec 2006, said the Troy-based group.
The investors include Delphi stockholder Appaloosa Management LP, with Cerberus Capital Management, LP, and Harbinger Capital Partners Master Fund I Ltd, as well as Merrill Lynch & Co. and UBS Securities llc.
Delphi, which makes polyurethane-coated instrument panels among its many automotive components, said the investors and General Motors Corp. (GM) have signed with Delphi an outline for treatment of company stakeholders, which also covers other aspects of the company's plant to exit Chapter 11 bankruptcy. Delphi is GM's biggest compontent supplier.
A few days after the Appaloosa-led plan, another Delphi shareholder, Highland Capital Management LP produced its own, $4700-million reorganisation plan for Delphi, potentiallly instituting a struggle for control of the auto parts supplier between the two investment groups.
Separately, Delphi said on 18 Dec, it has also accepted a proposal from JPMorgan Chase Bank NA and a group of lenders to refinance its existing $2000 million debt facility and about $2500 million of other loans.
"Today's agreements represent significant milestones in Delphi's reorganisation and another major step forward towards emergence from our Chapter 11 reorganisation in the US," said Delphi chairman and ceo Robert "Steve" Miller, in the 18 Dec company statement.
Delphi also announced that Rodney O'Neal, currently president and chief operating officer, will replace Miller earlier than previously planned, on 1 Jan 2007. Miller, who joined Delphi in the middle of 2005 to handle the restructuring, will become Delphi's first executive chair and will continue to oversee the company's chapter 11 reorganisation, said the group.
Delphi, which filed for US bankruptcy in October 2005, is in the process of cutting many hourly and salaried jobs and closing or selling 21 of 29 US plants, as well as dropping various product lines. Investors can terminate the agreement if Delphi does not reach deals with GM and the unions by 31 Jan, Delphi said.
Delphi said it expects to come out of Chapter 11 in the first half of 2007."