(RTTNews) - Auto-parts maker Delphi Corp.
(DPHIQ.PK) on Wednesday after the closing bell said that General Motors Corp.
(GM) is prepared to provide additional exit financing to the company to emerge from bankruptcy.
The Troy, Michigan-based company said it now expects $6.1 billion exit financing package to include a $1.6 billion asset-backed revolving credit facility and a first-lien term loan of at least $1.7 billion.
The exit financing package also includes an up to $2 billion first-lien term note to be issued to GM, which is junior to the $1.7 billion first-lien term loan, and an $825 million second-lien term loan, of which any unsold portion would be issued to GM.
In addition, Delphi has filed a motion in the Bankruptcy Court today seeking limited relief from the Court under section 1142 of the Bankruptcy Code with respect to the plan, which was confirmed by the Court in January.
Under Section 1142 of the Bankruptcy Code, bankruptcy courts may direct the debtor and any other necessary party to perform any act that is necessary for the consummation of a plan that has been confirmed by the Bankruptcy Court.
Delphi's lead plan investor has also agreed to extend deadline from March 31, 2008 to April 5, 2008, to secure the loans or possibly lose an equity investment deal that is also crucial to a Chapter 11 exit.
Delphi, which was GM's auto parts division until a spin-off in 1999, had not been able to secure the $7.1 billion in debt financing that it needed to pay creditors, including General Motors. The company, along with its affiliates, jointly filed a voluntary petition for reorganization under the U.S. Bankruptcy proceedings, in October 2005.
Last month, the United States Bankruptcy Court for the Southern District of New York ruled that the company had met all of the statutory requirements to confirm its plan of reorganization. The bank entered an order validating the first amended joint plan of reorganization, allowing the company to emerge from Chapter 11 bankruptcy protection.
The plan of reorganization includes finalizing the rights offerings provided for under the plan, closing of the investment agreement with the plan investors and consummation of the global settlement agreement with General Motors.
Delphi intends to emerge during the current calendar quarter following the syndication and closing of about $6.10 billon of exit financing facilities and satisfaction of other conditions to the effective date of the plan.
Delphi said that while one class each in two lower tier Delphi subsidiaries did not accept the plan, the Bankruptcy Court confirmed the plan over the vote of the two subsidiary dissenting classes holding that Delphi was entitled to confirm and implement the plan for several reasons including based on 'new value' contributed by Delphi to the subsidiaries.
The bankruptcy court stated that it would approve the plan once Delphi drastically reduced cash bonuses for top executives, to $16.50 million from a proposed $87 million. Delphi said that it reduced the payments to $16.50 million, and the board's compensation committee would decide how to distribute the money.
DPHIQ.PK closed Wednesday's regular trading session at $0.16. GM ended Wednesday regular trading session at $22.97, down 10 cents. In the after-hours, the shares further lost 9 cents.
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