Delphi terminates equity deal with Cerberus, plans financing alternative

Mumbai: Auto parts maker Delphi Corporation has terminated the equity purchase and commitment agreement and related plan framework support agreement with Cerberus Capital Management L.P. and other investors.

Delphi said it had terminated a $3.4 billion financing plan to bring the company out of bankruptcy protection but that it expected to sign a new deal this month. The company said it planned to emerge from bankruptcy by the end of the year, within six months of its original timetable. Its board is scheduled to meet next Monday to consider a new financing agreement.

Delphi said these developments are not expected to prevent the company from filing its plan of reorganisation and related documents with the bankruptcy court before the current expiration of the company's exclusivity period or emergence from Chapter 11 reorganisation this year.

Delphi filed a motion on June 29 seeking bankruptcy court approval of a ratified Delphi-GM agreement with the United Auto Workers (UAW). Delphi is currently engaged in settlement discussions with its second and third largest US labour unions and is working to conclude discussions with those unions as well as three smaller unions as soon as possible.

The company also confirmed that its discussions with GM on a comprehensive settlement agreement had entered the documentation phase and that it expected a settlement with GM to be incorporated into the company's plan of reorganisation.

Last month, UAW members approved a deal that allows some plant closings, keeps others open and cuts wages for long-time workers from around $27 per hour to a pay range for everyone that runs from $14 to $18.50.