Delphi's disclosure statement hearing to continue on Oct. 25; exit financing in promising shape

By Reshmi Basu

New York, Oct. 3 - Delphi Corp. asked for more time to negotiate with lenders as it tries to drum up $7.1 billion in exit financing amid a shaky credit market.

Wednesday marked the start of the company's hearing for approval of its disclosure statement.

The company told the court that while it has made progress with lenders for the financing, it still needs more time for negotiations and, hence, requested a continuation of the hearing.

Day two has been scheduled for Oct. 25.

If the company is unable to secure financing, there will be slight changes made to creditors' recovery rates. However, the company has previously said that it has no intention of renegotiating the deal with stakeholders. A new loan deal will result in "laser-like amendments" intended to address the capital markets, said Delphi counsel Jack Butler of Skadden, Arps, Slate, Meagher & Flom LLP during Wednesday's hearing.

He also added that the company intends to have a letter of commitment prior to the closure of the hearing.

The confirmation of the plan and the commencement of the rights offering are expected to take place before the end of the year while the company expects to emerge from Chapter 11 shortly thereafter.

As previously reported, the company's reorganization will be partly funded with $2.55 billion from a group of investors led by hedge fund Appaloosa Management LP.

Additionally, the plan investor will buy any unsubscribed shares of common stock in connection with a $1.575 billion discount rights offering that will be made available to existing common stockholders.

Delphi, a Troy, Mich.-based automotive electronics manufacturer, filed for bankruptcy on Oct. 8, 2005. Its Chapter 11 case number is 05-44481.

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