Saturday, January 13, 2007
Delphi has about 1,700 workers in the Mahoning Valley.
NEW YORK (AP) -- A federal bankruptcy judge on Friday approved a complex plan to inject as much as 3.4 billion into Delphi Corp., opening the way for the transformation of the auto-parts maker as it attempts to exit bankruptcy.
Judge Robert Drain called the approval a "watershed event" in the case.
"This is a case with the potential for truly endlessly moving parts," he said.
Under the plan, affiliates of three private equity investors, Appaloosa Management LP, Cerberus Capital Management LP and Harbinger Capital Partners Master Fund I, along with Merrill Lynch & amp; Co. and UBS Securities LLC, have the right to buy shares in a restructured Delphi for 1.4 billion to 3.4 billion.
Delphi board members chose the Appaloosa-Cerberus plan over a competing 4.7 billion offer by Highland Capital Management LP, a current shareholder.
The plan is supported by General Motors Corp. -- Delphi's former parent and its biggest customer -- the company's labor unions, and a committee of unsecured creditors.
Delphi has about 8,000 hourly workers in Ohio. There are about 700 hourly workers and 1,000 salaried workers in the Mahoning Valley. Warren is the headquarters for Delphi Packard Electric, a division of Delphi.
Delphi Executive Chairman Robert S. Miller, who was chief executive until Jan. 1, said Thursday that the investor group brings with it the best chance of reaching settlements with its labor unions and GM.
Appaloosa, which already owns about 9.3 percent of the company, and Cerberus would take the biggest stakes. The plan allows the investors to buy a minimum of 30 percent and up to 72 percent of Troy, Mich.-based company, but depends on the company reaching agreements with its labor unions and GM by Jan. 31.
Delphi lawyer John W. Butler said the deal was the result of negotiations over a period of more than five months that were "complex, difficult, and controversial at times."
"We're trying to find that rock that we can stand on to move this company forward in its transformation," he said.
Lawyers for the official shareholder committee and Highland -- who had objected to the equity investment plan -- said if the plan's proposed terms were ultimately approved, its investors would be taking away 500 million to 1 billion that could go to current shareholders, instead. The proposal calls for Delphi to issue 135.3 million shares of new common stock and grant current shareholders 3 million shares, plus the right to buy more new shares at a discount. Any unbought shares would be offered to the investors. Equity holders are normally the last to be paid in bankruptcy cases.