Delphi creditors: Block exit-financing deal

Too much uncertainty
surrounds Delphi’s
restructuring plan,
objectors say.

DOW JONES NEWSWIRES

WASHINGTON — Creditors of Delphi Corp. are asking a bankruptcy court to block the auto-parts supplier’s plan to move forward with a preliminary exit-financing deal, calling the move premature.

In filings Tuesday in the U.S. Bankruptcy Court in Manhattan, two creditor groups expressed concern that Delphi is pushing forward with an exit-financing plan in spite of uncertainty surrounding its reorganization plan and its $2.55 billion equity-investment pact with the Appaloosa Management LP.

Delphi last week said proposed amendments to its investment pact with the Appaloosa group expired because it failed to meet certain conditions. The underlying $2.55 billion investment deal, however, remains intact. The company was forced to change the investment agreement and the terms of its reorganization plan after it encountered trouble obtaining exit-financing.

Troy, Mich.-based Delphi has been operating in bankruptcy since Oct. 8, 2005. In Ohio, the company employs about 3,500 hourly workers, including about 1,000 in the Mahoning Valley at Delphi Packard Electric.

In a separate objection filed Tuesday, Wilmington Trust Co. asked the court to deny Delphi’s request to enter into a preliminary exit-loan deal with JP Morgan Securities Inc., JP Morgan Chase Bank and Citigroup Global Markets Inc. until the company irons out the details of the equity-investment pact.

“It is decidedly unclear whether the financing arrangements remain suited to [Delphi’s] exit financing needs following the termination” of the amended equity-investment deal, Wilmington Trust, the trustee for $2 billion in Delphi senior notes, said in court papers.

Delphi on Friday will ask the court for permission to pay fees connected with the financing and to begin the process of trying to syndicate the loan. JP Morgan and Citigroup have agreed to use “commercially reasonable best efforts” to assemble a syndicate of lenders to provide the financing.

The company cut its proposed financing package by $2 billion amid a tight credit market that has caused trouble for companies trying to arrange bankruptcy-exit loans.

Delphi, a major supplier to General Motors Corp., is seeking to borrow on a $1.6 billion senior secured first-lien asset-based revolving loan, a $3.7 million senior secured first-lien term loan and a $1.5 billion senior secured second-lien term loan.

The company, which filed for bankruptcy protection two years ago, had sought to exit Chapter 11 by the end of this year but recently said it expects to do so in the first quarter of 2008.