DETROIT — The Delphi Corporation and its former parent, General Motors, will lose out on more than $1 billion under a revised financing plan intended to bring Delphi out of bankruptcy by year’s end.þþDelphi said Wednesday that it would receive as much as $2.55 billion in investments under the new arrangement, which replaces a $3.4 billion plan that was scrapped after the primary investor, the private equity firm Cerberus Capital Management, withdrew. The new lead investor is Appaloosa Management, Delphi’s largest shareholder.þþMeanwhile, G.M. will not receive $315 million in Delphi stock that it would have under the arrangement involving Cerberus, although the automaker will get about $100 million more in cash.þþIf a federal judge approves the plan and a wage-cutting deal with Delphi’s largest union, Delphi will have cleared the biggest hurdles in its path toward solvency, nearly two years after it filed one of the largest bankruptcies in United States history. The wage-cutting deal was reached in June after lengthy negotiations with the United Automobile Workers union and G.M. and was ratified by U.A.W. members, some of whom will see their pay reduced to $14.50 or $18 an hour, from $27.þþDelphi, based in Troy, Mich., still is seeking new labor contracts with its other unions and a final settlement with G.M. It said it would file a reorganization plan this quarter.þþDelphi’s chief reorganization officer, John D. Sheehan, said in a statement that the new plan shows progress and “provides further evidence to customers and other stakeholders that Delphi should receive the financial support necessary to emerge successfully from Chapter 11 reorganization.”þþThe deal is supported by G.M., even though the original terms were more favorable to the automaker. The new plan calls for Delphi to give G.M. $2.7 million in exchange for G.M.’s contributions to Delphi’s reorganization. Under the plan, that transaction would resolve G.M.’s claims against Delphi.þþ“We’re getting more cash instead of stock,” said a G.M. spokeswoman, Renee Rashid-Merem. “It was a fairly consistent deal.”þþG.M., which spun off Delphi in 1999, has said it expects to be responsible for $7 billion in costs related to Delphi’s bankruptcy.þþDelphi agreed to the Cerberus-led financing package in December but was forced to regroup after Cerberus turned its attention to buying out the Chrysler division of DaimlerChrysler. Cerberus’s bid for Chrysler won, and the company has said it would close on the deal by September.þþFour investors in Delphi’s new plan have been involved before: Appaloosa, Harbinger Capital Partners, Merrill Lynch and UBS Securities. They are joined by Pardus Capital Management, a hedge fund that already is a part owner of two auto suppliers, Visteon and Valeo.þþThe investors have agreed to buy $800 million in convertible preferred stock and about $175 million in common shares of Delphi. They also will buy any remaining common shares after a $1.6 billion rights offering to current stockholders.þþ
Source: NY Times
