Delphi says original Appaloosa investment plan still on table; continues discussions over reorganization

By Reshmi Basu

New York, Nov. 9 - Delphi Corp. said Friday that the $2.55 billion investment plan led by Appaloosa Management LP is still on the table, even though the company failed to meet conditions for a revised version of that plan.

The company continues to be "engaged in discussions with its principal stakeholders, including Delphi's statutory committees, plan investors and General Motors Corp." in an effort to hammer out consensual agreements, said Lindsey C. Williams, a company spokesman.

The process could lead to additional amendments to the company's disclosure statement, plan of reorganization, investment agreement and GM settlement agreement.

On Thursday, Appaloosa filed a statement with the U.S. Securities and Exchange Commission, which said that it had terminated the proposed amendment to an equity purchase and commitment agreement because certain conditions and targets had not been met prior to the Nov. 8 scheduled hearing, which has been pushed back to Nov. 29.

"On November 6, 2007, as a result of certain of the conditions set forth therein not being satisfied, the Revised Proposal terminated in accordance with its terms," the SEC filing said.

Williams told Prospect News that the original investment plan, which was approved by the U.S. Bankruptcy Court of the Southern District of New York in August, was still in effect but there may be further modifications as the company strives to arrive at a consensual agreement.

Furthermore, he emphasized that "Appaloosa has not pulled out."

On Tuesday, Delphi filed court papers saying that it had lined up potential exit facility arrangers JPMorgan Securities Inc., JPMorgan Chase Bank, NA and Citigroup Global Markets Inc.

Under the engagement letter, JPMorgan and Citigroup have agreed to attempt to assemble a syndicate for $6.8 billion in exit financing.

The potential exit facility would consist of a $1.6 billion senior secured first-lien asset-based revolving credit facility; a $3.7 billion senior secured first-lien term facility; and a $1.5 billion senior secured second-lien term facility, of which up to $750 million would be in the form of a note issued to GM. in connection with plan of reorganization distributions.

As previously reported, the company was originally seeking up to $7.5 billion in funded debt and a $1.6 billion asset-based revolver, but Delphi said it reduced proposed debt levels to facilitate an emergence financing package that could be executed under existing market conditions.

Under the Revised Proposal, put forward on Oct. 29, investors A-D Acquisition Holdings, LLC, Del-Auto, Merrill, UBS and Pardus DPH would have invested up to $2.55 billion through the purchase of $800 million of convertible preferred stock and $175 million of common stock plus backstopping a $1.575 billion rights offering to unsecured creditors. A-D Acquisition Holdings, LLC is an affiliate of Appaloosa and Del-Auto of Harbinger Harbinger.

Calls made to Appaloosa were not returned.

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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