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$3.4-billion investment offer for Delphi OKd

January 24, 2007|From Bloomberg News

Auto parts maker Delphi Corp. has agreed to a $3.4-billion investment offer from a group led by Cerberus Capital Management after a Bankruptcy Court judge approved the transaction.

Delphi and the investment firms entered into the agreement Thursday, the company said in a filing Tuesday with the Securities and Exchange Commission.

The investment, which will help Delphi exit bankruptcy, is contingent on the company reaching agreements with its labor unions and other conditions, the company said in the filing.

The deal will give the investment group a 30% to 70% stake in Delphi when it emerges from Chapter 11, depending on how many shares of the reorganized company are purchased by existing investors.

U.S. Bankruptcy Judge Robert Drain in New York approved the proposal Jan. 12.

The investment group also includes Appaloosa Management, which is Delphi's biggest investor; Harbinger Capital Partners Master Fund I Ltd.; and Merrill Lynch & Co.

Delphi, once owned by General Motors Corp., filed for Bankruptcy Court protection in October 2005 with $22.2 billion in debt and $17.1 billion in assets.

Separately, Drain on Tuesday granted a request by Delphi to extend by nine months the period in which the company has the exclusive right to ask creditors to approve its reorganization plan.

The request was opposed by Highland Capital Management, Delphi's second-largest investor, which had proposed investing $4.7 billion in the parts maker.

Shares of Troy, Mich.-based Delphi fell 8 cents to $3.22 in over-the-counter trading.

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