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Delphi co-investors object to GM exit facility participation
By Caroline Salls
Pittsburgh, March 6 - Four Delphi Corp. co-investors objected to the company's motion seeking clarification that its revised exit financing proposal complies with the company's equity purchase agreement, according to an objection filed Thursday with the U.S. Bankruptcy Court for the Southern District of New York.
According to the objection filed by co-investors Harbinger Del-Auto Investment Co. Ltd., Merrill Lynch, Pierce, Fenner & Smith Inc., UBS Securities LLC and Pardus DPH Holding LLC, the equity purchase agreement contains a provision that prohibits any new agreement between Delphi and GM that is "outside of the ordinary course of business."
"A multi-billion dollar secured loan from an automobile manufacturer simply cannot be in the ordinary course of business," the co-investors said in the objection.
In addition, the investors said the new GM proposal will have a significant impact on the plan investment agreement, and "the wholesale scrapping of the terms of the financing letter in lieu of a drastically different financing proposal" violates the terms of the equity purchase agreement.
"It is immediately apparent that the debtors' interpretation is simply a brazen attempt to ignore a portion of the contract that they are unable to satisfy," the objection said.
If the court does not deny Delphi's compliance clarification motion, the investors said it should convert the motion to an adversary proceeding to allow discovery and a trial process.
Delphi is a Troy, Mich.-based automotive electronics manufacturer that filed for bankruptcy protection on Oct. 8, 2005. Its Chapter 11 case number is 05-44481.
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