Delphi to Corp to try again to secure $6.1B in loans

Delphi to Corp to try again to secure $6.1B in loans

NEW YORK (AP) — Auto parts supplier Delphi Corp., which failed in its first attempt to get $6.1 billion in bankruptcy exit loans, announced Monday that it would try again.

Finding such financing became tough as defaults have risen on U.S. subprime mortgages and the value of securities backed by such loans has plummeted, forcing big writedowns at major financial companies.

This time around, Delphi launched the effort to get exit financing with help from its former parent, General Motors Corp. GM is allowed to offer as much as $750 million in loans under the company’s reorganization plan. On Friday, a judge ruled that a GM affiliate — but not GM itself — could offer two other loans, one of $2 billion and a second loan worth as much as $825 million.

“Although certain of the investors continue to object to the proposed exit financing, Delphi believes its proposed exit financing is consistent with the court’s guidance and previously issued confirmation order,” Delphi said in a statement issued Monday.

GM spokeswoman Renee Rashid-Merem said the company is not naming the affiliate involved in the Delphi financing until the final details have been worked out.

Five of six investors who will inject as much as $2.55 billion in return for equity in the reorganized company objected to GM’s increased participation in the loans package. The investors, led by Appaloosa Management LP, objected over concerns about GM’s expanding its influence over Delphi, which was its parts subsidiary until 1999 and still its biggest supplier.

The loans would “adversely affect the company and the investors by materially increasing and concentrating GM’s ongoing influence and control,” they said.

The other four investors who objected are Harbinger Capital Partners Master Fund I Ltd.; Merrill Lynch, Pierce, Fenner & Smith Inc.; UBS Securities LLC, and Pardus Capital Management LP.

Goldman Sachs Group Inc. is a sixth member of the investor group but did not object.

The company has been in bankruptcy since October 2005 and now faces an April 4 deadline to secure the loans it needs.