Highland says Delphi debtholders would receive cash recovery or have claims reinstated under its proposal

By Jennifer Lanning Drey

Portland, Ore., Jan. 5 - Delphi Corp.'s unsecured bondholders would receive a full cash recovery or have their claims reinstated under Highland Capital Management LP's $4.7 billion equity commitment proposal, according to a letter sent by Highland to serve as clarification to Delphi's board of directors and filed with the Securities and Exchange Commission.

According to a related SEC filing, Delphi and Highland met on Jan. 2 to discuss the terms and conditions of Highland's proposal as well as Highland's opposition to the equity commitment proposal made by a group of investors led by Cerberus Capital Management, LP and Appaloosa Management LP.

Highland expects its negotiations with Delphi to continue, assuming the companies can reach a confidentiality agreement, according to the filing.

Delphi said in the filing that it has been in preliminary discussions with a number of third parties that have expressed interest in Highland's proposal, including financing sources interested in possibly providing financing for the backstop or participating with Highland in the backstop.

Highland has not yet determined if other entities will be included in the proposal, the backstop or the financing of the backstop but believes it would be able to provide similar commitments to those proposed in the Appaloosa/Cerberus proposal, according to the filing.

Equity commitment proposal

As previously reported, under Highland's equity commitment proposal:

• All existing stockholders will be able to participate in a $4.7 billion rights offering, and there will be no convertible preferred shares;

• All existing stockholders with more than 0.5% of the common shares will have the right to purchase any unsubscribed shares in the rights offering, and Highland Capital will commit to backstop the rights offering;

• All debtholders and general unsecured claimants will be able to receive par value plus accrued interest, and bondholders will also have the option to keep their bonds;

• The terms of Delphi's proposed deal with General Motors Corp., including cash distribution, share allocation and funding of pension obligations, will not change; and

• A six-member panel will nominate the company's 12-member board. Highland said a majority of the panel will be comprised of participants in the rights offering and a representative from the equity committee. The panel will also include one representative from management and one representative from GM.

• Highland would receive a backstop fee of 2.5% of the rights offering.

Delphi, a Troy, Mich.-based automotive electronics manufacturer, filed for bankruptcy on Oct. 8, 2005 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 05-44481.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.