Delphi get court OK to extend DIP loan, exclusivity periods; no exit financing seen yet

By Rebecca Melvin

New York, April 30 - Delphi Corp. obtained court approval on Wednesday to extend the maturity of its refinanced $4.1 billion debtor-in-possession financing to Dec. 31, 2008 from July 31.

The DIP loan was refinanced this month and is in syndication, with closing seen in less than 10 days, Delphi counsel John William Butler of Skadden Arps told the U.S. Bankruptcy Court for the Southern District of New York.

"JPM has received a number of substantial commitments already, and it's relevant and important to move forward promptly with a DIP extension," Butler told the court.

His statement was made after judge Robert Drain asked why not wait for approval until syndication is complete.

"We already have sufficient assurance in hand, and the product is going to be completed," Butler said.

Delphi also gained approval to extend further its exclusive plan of reorganization filing period. The final order extends the period to 30 days after its confirmed plan takes effect and its exclusive vote-solicitation period to 90 days after the plan effective date. The plan-filing period was extended to Aug. 31, and the vote-solicitation period was extended to Oct. 31.

The plan-filing extension was a precautionary measure since Delphi's plan of reorganization was confirmed by the court on Jan. 25, Butler said.

With a confirmed plan in hand, Delphi has been unsuccessful to date securing its complete exit financing package needed under the plan.

Exit financing closing started on April 4 but was never completed after plan investors terminated their agreement to make a $2.55 billion equity investment, a key component of the financing.

Currently Delphi is evaluating with counsel the events that led up to April 4 and two different tracks that the company could take, Butler explained to reporters after the hearing.

"One track is to remedy against plan investors, and their performance of a commitment that we have. The second track involves meeting with stakeholders, the two statutory committees and General Motors to evaluate what modifications might be made to the plan to emerge as soon as practical," Butler said.

"All options to emerge as soon as practical are being considered," he said when asked if Delphi would consider moving forward without equity investors. The company has also said that it is considering filing suit against the plan investors.

Lead equity investor Appaloosa Management LP claims Delphi breached the provisions of their agreement, including that the company secure $6.1 billion of exit financing by the April 4 deadline.

Delphi claims that it had secured the required $6.1 billion. "They were all sitting right there," Butler said of the April 4 meeting. The company claims to have successfully arranged exit facilities from J.P. Morgan Securities Inc. and Citigroup Global Markets Inc.

As previously reported, Delphi's refinanced DIP facility consists of a $1 billion first-priority revolving credit facility, an up to $600 million first-priority term loan and a $2.5 billion second-priority term loan.

Also, the amount of unpaid professional fees under the DIP facility carve-out will be reduced to $5 million from $10 million following the delivery of a borrowing base certificate.

Delphi said the maturity extension is necessary to allow the company to continue on a path to emergence from Chapter 11 bankruptcy.

In addition, the company is looking to enter into an arrangement with General Motors Corp. and/or a GM affiliate under which GM would reimburse some payments Delphi made during its Chapter 11 cases.

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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