Delphi Struggles To Emerge From Bankruptcy
By Anthony Fontanelle

Delphi Corp. finds it hard to emerge from bankruptcy. Matter of fact, the ailing auto parts supplier is struggling to raise $6.1 billion in financing. This resort is without limitation to pursue other moves such as turning to General Motors Corp. for help or offering its pension plans a stake in the company, Detroit News reported.

The Troy-based auto supplier’s planned exit from after about more than a couple of years and more than $320 million in accounting, consulting, and legal bills could be held in abeyance in a matter of months if Delphi has to renegotiate its exit plan and seek the approval of U.S. Court.

For months now, Delphi has been trying to raise fund money. What’s more, the supplier twice slashed the target amount from $8.7 billion initially to $6.1 billion in January. Delphi's bankers, led by JP Morgan Chase and Citigroup Global Markets, have been trying to sell the debt in a hard credit market. According to reports, about $200 billion in loans have gone unsold. The loans cover the aid given to Cerberus Capital Management to finance the acquisition of Chrysler LLC from its former German parent Daimler AG.

A person familiar with the subject told the news authority that Delphi may seek to tap into the money it plans to contribute to its pension plan once it emerges from bankruptcy. Delphi also could seek financial support from GM, its former parent. At a hearing in December, U.S. Judge Robert Drain, who approved Delphi's emergence plan, noted the dilemma Delphi faces in raising more money. "When you don't have cash and you can't raise debt, the solution is to provide equity," he said.

Automotive

title="headlights" target="_blank">headlights are illuminating the plight of Delphi. Everyone in the industry wants to know the right action that should be taken. Lindsey Williams, Delphi spokesman, said Wednesday that the company has made some progress in obtaining exit financing and is still planning to emerge from court protection by the end of next month.

GM told its investors that the company is "exploring alternatives with Delphi" if the planned financing falls through. The statement was given Tuesday during the announcement of the 2007 financial results.

The Detroit automaker said it has taken $7.5 billion in charges in connection with winding down its relationship with Delphi and that it set aside $1.55 billion in its Delphi reserve fund last year, plus $552 million for Delphi pension benefits. GM also disclosed it had taken a $622 million charge as a result of amendments to the Delphi reorganization plan, for, among other things, "possible support based on ongoing discussions with Delphi," the company said in a statement.

Renee Rashid-Merem, GM spokeswoman, said the company was working with Delphi. "The discussions remain fluid," she said, adding that it is in everyone's interest for Delphi to emerge from bankruptcy.

"Clearly, there are challenges in the credit markets, and we are going to talk to Delphi and plan investors" she noted about options.

Anthony Fontanelle is a 35-year-old automotive buff who grew up in the Windy City. He does freelance work for an automotive magazine when he is not busy customizing cars in his shop.