Delphi fails to secure court acknowledgement of exit financing compliance

By Caroline Salls

Pittsburgh, March 11 - Delphi Corp.'s motion asking the U.S. Bankruptcy Court for the Southern District of New York to confirm that an exit financing proposal that calls for increased participation by General Motors Corp. complies with the company's $2.55 billion equity purchase commitment has been denied, according to a Tuesday court filing.

As previously reported, Delphi said it believes that GM's increased participation in the exit financing structure is necessary to successfully syndicate the financing, and it believes that the increased participation complies with the company's first amended plan of reorganization and related investment agreement.

However, some of Delphi's plan investors do not agree that the exit financing complies with the investment agreement.

In an attempt to receive confirmation that GM's increased participation complied with the plan and the investment agreement, Delphi asked for limited relief under a bankruptcy code provision that allows courts to order parties to take any act necessary for the consummation of a confirmed plan of reorganization.

Delphi also filed the compliance motion in an effort to hold each of the plan investors to their obligations under the investment agreement.

According to Delphi's motion, A-D Acquisition Holdings, LLC is contending that GM's participation in the exit financing did not comply with the equity purchase commitment.

Although Delphi delayed the planned relaunch of the exit financing to try to resolve the plan investors' concerns, five of the six plan investors still contend that the new exit proposal does not comply with the commitment.

Delphi said it needed to move forward with the exit financing and rights offering included in the plan in order to be in a position to emerge from bankruptcy by April 4.

"The timetable literally has no margin for error or slippage, and the debtors must seek this court's intervention and assistance in consummating the plan," the company said in the motion.

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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