Delphi files Appaloosa-funded plan of reorganization, seeks up to $7.5 billion in exit financing

By Caroline Salls

Pittsburgh, Sept. 6 - Delphi Corp. filed a plan of reorganization and related disclosure statement Thursday with the U.S. Bankruptcy Court for the Southern District of New York that will be partially funded by an investment from Appaloosa Management LP affiliate A-D Acquisitions Holdings, LLC.

As previously reported, under the equity purchase and commitment agreement, the plan investor has committed to purchase $800 million of convertible preferred stock and about $175 million of common stock in the reorganized company.

Additionally, the plan investor will buy any unsubscribed shares of common stock in connection with a $1.575 billion discount rights offering that will be made available to existing common stockholders.

According to the disclosure statement, common stockholders will receive transferable rights to purchase 40.85 million shares of new common stock in the reorganized company at a price of $38.56 per share and non-transferable rights to buy $572 million of shares of new common stock in the reorganized company at a price of $45 per share.

Common stockholders will also receive their share of $66 million of new common stock, or 1.48 million of 147.63 million shares to be issued, as well as new warrants to buy 5% of the new common stock in the reorganized company at an exercise price of $45 per share.

Delphi said Appaloosa and any other plan investors have agreed not to participate in the par value rights offering, and the rights that would otherwise go to them will be distributed to the other holders of existing common stock.

In addition to the plan investment, Delphi said it is seeking $7 billion to $7.5 billion more in exit financing, and it expects to file an exit facility commitment early in the fourth quarter.

Plan creditor treatment

Treatment of creditors under the plan will include:

• Holders of $3.427 billion in debtor-in-possession claims and $735 million in administrative claims will recover 100% in cash;

• Holders of $20 million to $73 million in priority tax claims will recover 100% in cash to either be paid in full or in installments over six years;

• Holders of $29 million to $34 million in secured claims will recover 100% through either payment in full or reinstatement of their claims;

• Holders of customer, environmental or employee obligation or litigation exposure flow-through claims will have their claims satisfied in the ordinary course of Delphi's business;

• Holders of $4.2 billion in general unsecured claims will recover 100% through cash equal to 20% of the claim and new common stock in the reorganized company equal to 80% of the claim;

• Holders of General Motors Corp. claims will receive distributions negotiated under a plan settlement of Delphi's separation from GM and issues related to Delphi and GM's ongoing relationship, with distributions to include $2.7 billion in cash and retention of GM surviving claims;

• Holders of multi-district litigation settlement securities action note claims will receive $204 million in cash and common stock;

• Intercompany claims will be either reinstated or eliminated;

• Holders of existing common stock will receive a share of 1.48 million shares of new common stock in the reorganized company, transferable rights to buy 45.6 million shares of new common stock for $1.75 billion, five-year warrants to buy an additional 5% of the new common stock in the reorganized company and non-transferable rights to buy $572 million of new common stock in the reorganized company;

• Holders of securities action settlement equity claims will receive $204 million in cash and common stock;

• Holders of pension plan lawsuit settlement claims will receive $24.5 million in cash and common stock;

• Holders of other interests will receive no distribution under the plan; and

• Interests in affiliate debtors will not be canceled under the plan.

A hearing on approval of the disclosure statement is scheduled for Oct. 3.

Delphi, a Troy, Mich.-based automotive electronics manufacturer, filed for bankruptcy on Oct. 8, 2005. Its Chapter 11 case number is 05-44481.

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