Delphi launches downsized $6.125 billion credit facility, sets price talk

By Sara Rosenberg

New York, Jan. 9 - Delphi Corp. held a bank meeting in New York on Wednesday morning to launch its downsized $6.125 billion credit facility, at which time price talk emerged, according to a market source.

The $1.6 billion ABL revolver was launched with talk of Libor plus 250 basis points, the $3.7 billion first-lien term loan was launched with talk of Libor plus 450 bps and the $825 million second-lien term loan price talk was labeled as still to be determined, the source said.

The first-lien term loan is being offered to investors with an original issue discount of 96 and carries call protection of 102 in year one and 101 in year two, the source added.

Of the total second-lien term loan amount, $750 million will be issued to General Motors Corp. in connection with plan of reorganization distributions.

JPMorgan and Citigroup are the lead banks on the deal.

The company will also hold a bank meeting in London on Thursday to launch the credit facility to European investors. Up to $750 million of the first-lien term loan will be placed with those investors.

Proceeds will be used to repay the company's debtor-in-possession financing facility, to fund other payments required upon emergence from Chapter 11 and to conduct post-reorganization operations.

Originally, the deal was expected to launch on Tuesday afternoon with a total size of $6.8 billion, with the difference being that the second-lien was going to be sized at $1.5 billion, but the deal was pushed off for one day to give the company time to complete the modification to its lender presentations and other documents after the decision was made to downsize the transaction.

The company said that the amount of the requested exit financing was reduced as a result of a permanent improvement in liquidity because it generated cash flow during the second half of 2007 in excess of the amount projected in its revised business plan.

Delphi is a Troy, Mich.-based automotive electronics manufacturer.

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