Delphi gets court approval of plan based on DIP lenders' credit bid

By Jennifer Lanning Drey

Portland, Ore., July 30 - Delphi Corp. received court approval of its first-amended plan of reorganization Thursday following a two-day hearing in the U.S. Bankruptcy Court for the Southern District of New York, according to a company news release.

The plan incorporates a pure credit bid submitted by Delphi's debtor-in-possession lenders and has the support of General Motors Corp.

Delphi said it expects to emerge from bankruptcy in the current calendar quarter following the syndication and closing of its exit financing facilities and satisfaction of other conditions, including closing on transactions contemplated under the provisions of the master disposition agreement.

As previously reported, Delphi named JPMorgan Chase Bank, NA, as the administrative agent under its May 2008 credit agreement, as the winner of the company's auction on July 27.

Upon accepting the credit bid, Delphi also announced that its DIP lenders and General Motors had agreed to modify their financing agreements to provide liquidity through a combination of loans from GM, Delphi's use of cash collateral accounts pledged to the DIP lenders and the repatriation of excess liquidity from Delphi's global affiliates.

Completion of the credit bid transaction satisfies amounts owed by Delphi and its affiliates to its DIP lenders.

Under the credit bid, Delphi said GM Components Holdings, LLC and newly formed entity DIP Holdco 3, LLC will acquire substantially all of Delphi's assets and liabilities.

"Delphi has executed a dramatic transformation of our business during the restructuring process and will emerge as a strong and resilient company," Rodney O'Neal, Delphi's chief executive officer and president, said in the release.

"The process has not been without great sacrifice on the part of several stakeholders; however, we have taken the necessary actions to position Delphi as a competitive enterprise with a pipeline full of outstanding technologies that help our customers meet the demands of their consumers."

GM Components terms

The GM Components consideration includes:

• The assumption or payment of the applicable cure amounts associated with the contracts and leases to be assigned to GM;

• The waiver by New GM and Old GM of their pre-bankruptcy claims, administrative claims and future claims;

• The payment of $291 million to the DIP facility agent;

• The payment of up to $50 million to Delphi to cover wind-down budget expenses; and

• Up to $15 million of professional fees, plus up to $12 million of the costs of solicitation for the modified plan, provided that the amount of these fees and the cure amounts to be paid or assumed by GM will not exceed $148 million.

DIP lenders consideration

The consideration to be provided by DIP Holdco 3 includes:

• The assumption of liabilities;

• The assumption or payment of cure amounts associated with the contracts and leases to be assigned to DIP Holdco 3;

• The credit bid;

• Up to $15 million of professional fees; and

• Payment of an up to $300 million deferred cash consideration to the holders of general unsecured claims.

Additional terms

In addition, the DIP lenders will acquire all of the company's remaining businesses after a wind-down, up to a maximum of $500 million after GM has recovered all of its advanced wind-down costs.

Similar to Delphi's prior agreement with Platinum Equity, the DIP lenders will enter a loan agreement, note agreement and investment agreement, and Elliott Associates, LP and one or more investment funds managed by Silver Point Capital LP will serve as commitment parties.

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.

© 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.