Delphi Corp. wants to pay General Motors a lot less cash as part of its financial restructuring to emerge from Chapter 11 bankruptcy protection.
The giant parts maker has filed potential amendments to its reorganization plan that would keep the GM settlement at $2.7 billion but provide just $750 million in cash instead of the full amount. The remaining $1.95 billion would be paid with the $750 million second-lien note and $1.2 billion in junior convertible preferred stock.
In a press release today, Delphi said GM supports the proposed amendments. The plan still must win approval in U.S. Bankruptcy Court in New York. A hearing is scheduled Nov. 8.
Tight credit markets have prompted changes to the financing package, especially how much cash would go to settle claims, Delphi announced. Delphi filed for Chapter 11 bankruptcy in October 2005.
Originally, Delphi said it would finance its emergence with a $1.6 billion asset-based revolving line of credit, a $5.6 billion exit term loan and a $1.5 billion unsecured note.
But the credit crunch has caused a scaling back of the plan. Now Delphi wants to fund the reorganization with a $1.6 billion asset-based, first-lien revolving credit line, a first-lien term loan of at least $3.7 billion and a senior secured second-lien loan of up to $1.5 billion.
Also, Delphis sales to GM in 2008now are expected to be below projections in the original financing plan. Sales are expected to return to the original projections in 2009-11, said Delphi spokesman Lindsey Williams.
An equity committee representing common shareholders is balking at the plan, Delphi said in a press release. It slashes potential recoveries for the group.
The plan now contemplates no direct distribution of 1.48 million shares in the newly reorganized company to current Delphi shareholders. It also eliminates a provision to common shareholders to buy up to 40.85 million shares in the new company at a discount.
Appaloosa Management LP and a group of investors would continue to pay about $2.55 billion for Delphi. But the changes reduce Delphis debt at emergence by about $2 billion, the release says.
Delphi, based in suburban Detroit, ranks No. 2 on the Automotive News list of the top 100 global suppliers with worldwide original-equipment automotive parts sales of $26.40 billion in 2006.