DETROIT (Thomson Financial) - The chairman of Delphi Corp said Wednesday that the struggling auto-parts company expects to reach a deal 'very shortly' on financing that would allow it to exit bankruptcy proceedings in the next few months.
Robert 'Steve' Miller said the turmoil in credit markets that created financing difficulties for the company appeared to be 'settling down.' As a result, he told reporters in Detroit, 'I am confident that we will get the funding put together very shortly.'
A Delphi attorney, Jack Butler, told a bankruptcy judge in New York Wednesday that the financing will be less than the $7.1 billion the company previously sought. That could mean reduced cash payments to the company's creditors, although Butler said the changes are likely to be small.
'We do anticipate there may be several laser-like, focused amendments' to Delphi's Chapter 11 plan, said Butler, who reported progress in the company's negotiations with prospective lenders.
Delphi, the largest supplier of parts to General Motors Corp., has been in bankruptcy reorganization since October 2005. Earlier this year, it reached a deal with a group of investors led by hedge fund Appaloosa Management for a $2.55 billion capital infusion. The company said it expected to exit bankruptcy before the end of this year.
'We've had another round of discussion with lenders and we're engaged presently in discussions with our statutory committees and General Motors and the plan sponsors,' Butler told U.S. Bankruptcy Judge Robert Drain at a court hearing.
Since a global credit squeeze began in August, Delphi has run into difficulty trying to obtain an exit-financing loan. Butler said last week that those difficulties would delay the Troy, Mich., company's emergence from bankruptcy by a few weeks, until January 2008.
Delphi's Chapter 11 plan calls for unsecured creditors to be repaid in full with a mix of about 20 percent cash and 80 percent stock at a value of around $45 a share. Existing shareholders are expected to get some new shares in the reorganized company, have the right to buy new stock at a discount and be issued warrants to buy more shares.
Butler said last week that cash distributions could be reduced under the plan because of financing difficulties.
On Wednesday, Drain dismissed several objections to Delphi's disclosure statement on its Chapter 11 plan.
The objections included one from workers at the Oak Creek Delco Electronics Systems plant in Wisconsin who said the plant's closing and transferring of jobs to Mexico and China was 'no less than treason.'
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