Delphi To Get $3.4 Billion Post-Bankruptcy Investment

Dec. 18, 2006
Cash infusion will put company in position to solve restructuring issues.

Bankrupt auto parts company Delphi Corp. said Dec. 18 it received a commitment for up to $3.4 billion in private equity investment to help support its emergence from creditor protection. Delphi said it had accepted a proposal for commitment to buy preferred and common stock from Appaloosa Management, Cerberus Capital Management and Harbinger Capital Partners as well as Merrill Lynch and UBS Securities.

The company, which was spun off from General Motors in 1999 but remains the automaker's biggest parts supplier, also said it reached an agreement to refinance some $4.5 billion in loans that are supervised under bankruptcy protection.

The financing from JPMorgan Chase Bank and a group of lenders will refinance Delphi's two billion-dollar debtor-in-possession credit and $2.5 billion in other loans.

"Today's agreements represent significant milestones in Delphi's reorganization and another major step forward towards emergence from our Chapter 11 reorganization in the U.S.," said Delphi chairman and chief executive Robert Miller. "Delphi has long emphasized its commitment to pursuing a resolution of the principal issues in our restructuring. The agreements announced today demonstrate real progress toward that objective."

Miller said the agreements would help the company pursue a course "that should lead to consensual resolution with our U.S. labor unions and GM while providing an acceptable financial recovery framework for stakeholders." Delphi is seeking to impose cuts for its unionized workers, but has postponed several times its request for the court to toss out the contracts.

GM is a key player in the Delphi reorganization because it has obligations on pension and health-care benefits to its former employees at Delphi should those benefits be nulled during bankruptcy proceedings.

The latest plan also calls for a reorganization of the top management and board of Delphi. The plan calls for a 12-member board, including 10 independent directors, as well as an executive chairman and a CEO. Current Delphi president and chief operating officer Rodney O'Neal would be appointed CEO and president of the reorganized Delphi on January 1, while Miller would become Delphi's first executive chairman and continue to oversee the company's emergence from bankruptcy.

Copyright Agence France-Presse, 2006

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