Delphi revises plan to emerge from bankruptcy protection

After spinning off from General Motors Corp. as a separate company, Delphi filed for bankruptcy protection in Oct. 2005. The parts manufacturer hoped to emerge from Chapter 11 by the end of 2007, but the tight credit market has pushed back that date to the first quarter of next year.

But the struggling company made some progress this week when it came to an agreement with General Motors Corp. and an investment group on a revised plan that would enable the auto parts maker to leave bankruptcy protection with $5.2 billion in financing, a spokesperson for Delphi said in an article published in the Associated Press.

But Delphi said its creditors' and equity committees still oppose the amended plan.

The new plan, details of which were expected to be filed soon in U.S. Bankruptcy Court in New York, is smaller than a plan released Sept. 6, which called for $7.1 billion in exit financing, the Delphi statement added

"Today's filings, which have been agreed upon by GM and all of our plan investors, are the cornerstones of a plan of reorganization that we believe can be achieved during this challenging capital markets environment," says John Sheehan, Delphi's chief restructuring officer.

Delphi has about 3,500 hourly workers in Ohio at eight plants in the Dayton area, Columbus, Warren and Sandusky.

The plan's investment group is led by an affiliate of the private equity firm Appaloosa Management LP.

Delphi said in its statement that it would continue to work toward getting a consensus for the amended plan among its stakeholders, including its creditors' and equity committees.

Earlier this month, the company reported that its third quarter net loss narrowed due to smaller expenses related to its reorganization under bankruptcy protection, but it continued to struggle against the effect of auto industry production cuts in North America.

Troy-based Delphi lost $1.2 billion, or $2.08 per share, compared with a loss of $2 billion or $3.51 per share, in the third quarter of 2006.

The auto parts supplier's loss includes an accrual of $369 million for interest expenses related to its bankruptcy reorganization plan, $124 million for charges for warranty matters and $112 million in costs including benefits for employees who have been let go.

For more information on Delphi, visit the company's Web site.