Delphi files new reorganization plan

Automotive parts maker going alone this time

By Tom Stundza -- Purchasing, 10/8/2008 11:33:00 AM

Delphi Corp., the former automotive parts-making arm of General Motors, has filed a new reorganization plan three years after the Troy, Mich., firm filed for Chapter 11 bankruptcy reorganization

The Detroit News says that while Delphi has used the last three years to overhaul its business, it has spent the last few months renegotiating deals with its largest stakeholders, including creditors and its former parent, to put it in a position to shop for the financing it needs to exit bankruptcy. Delphi has no investor lined up and now plans to reorganize on its own--still needing to raise $3.75 billion through debt and equity offerings.

Delphi values itself at $7.2 billion compared with a valuation of $12.8 billion when its previous reorganization plan was approved earlier this year. However, the earlier reorganization plan fell apart in April when New York investor Appaloosa Management withdrew a $2.55 billion investment commitment.

The new plan rests largely on GM's agreement to provide a total of $10.6 billion in support to Delphi's reorganization efforts. This plan, approved by creditors Sept. 25, includes GM's assumption of $3.4 billion in pension obligations for hourly workers.

Delphi had parts sales to automakers of $22.28 billion in 2007. The company makes a variety of mobile electronics and transportation systems, which include powertrain, safety, steering, thermal, and controls and security systems, along with other electronic and entertainment technologies.