Delphi gets approval of amended Appaloosa investment plan

By Reshmi Basu

New York, Dec. 7 - A federal judge approved Delphi Corp.'s amendments to an investment plan on Friday, which calls for the infusion of $2.55 billion by a consortium of investors, led by New Jersey-based hedge fund Appaloosa Management.

The original equity purchase and commitment agreement (EPCA) was approved by the court on Aug. 2. However, following this summer's disruptions to the credit markets, the plan investors renegotiated the terms of the deal that resulted in substantial discounts to purchase the company's common and preferred shares.

The crux of the dispute is whether or not the provisions under the equity purchase and commitment agreement are so binding that Delphi was unable to entertain other alternative offers.

However, judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York was skeptical of that argument, noting that "there were a lot of parties out there with a lot of money who could have come to the table."

Under Delphi's reorganization plan, the investors can buy series A convertible preferred stock at a 29.2% discount and shares of series B convertible preferred stock at a 28.6% discount.

The investment group also includes Harbinger Capital Partners Master Fund I Ltd.; Merrill Lynch, Pierce, Fenner & Smith Inc.; UBS Securities LLC; Pardus Capital Management LP; and Goldman Sachs Group Inc.

Delphi, a Troy, Mich.-based automotive electronics manufacturer, filed for bankruptcy on Oct. 8, 2005. 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.