Delphi gets court approval of Appaloosa investment plan

By Reshmi Basu

New York, Aug. 2 - Delphi Corp. obtained approval Thursday of its investment plan, which is headed by lead investor Appaloosa Management LP, from the U.S. Bankruptcy Court for the Southern District of New York.

The investors would inject Delphi with $2.55 billion in exchange for preferred and common stock in the reorganized company.

No objections were filed against the plan, Delphi attorney Jack Butler of Skadden, Arps, Meagher & Flom LLP told the court.

In addition, counsel from General Motors Corp., the creditors committee and the equity committee threw their support behind the agreement, as each noted that while the talks were lengthy and often acrimonious, the plan was a result of good faith and arms-length negotiations.

As previously reported, under the equity purchase and commitment agreement, the plan investors will commit to purchase $800 million of convertible preferred stock and about $175 million of common stock in the reorganized company.

Additionally, the plan investors will commit to purchasing any unsubscribed shares of common stock in connection with a $1.6 billion rights offering that will be made available to existing common stockholders, which would be launched following confirmation of Delphi's plan of reorganization.

In approving the plan, judge Robert D. Drain noted that it was an extremely important start that would allow Delphi to confirm its reorganization plan and exit bankruptcy.

Meanwhile the consortium of investors also includes Harbinger Capital Partners Master Fund I, Ltd., Merrill Lynch, Pierce, Fenner & Smith Inc., UBS Securities LLC, Goldman Sachs & Co. and Pardus Capital Management, LP.

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.

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