Delphi Corp., Troy, Mich., lost the backing of a private equity consortium crucial to the company’s plan to emerge from Chapter 11 bankruptcy protection, according to a statement filed today with the SEC. An agreement to acquire a significant portion of Delphi for $2.6 billion investment was terminated today by A-D Acquisition Holdings, a group led by hedge fund Appaloosa Management and includes Harbinger Capital Partners, Pardus Capital Management, Merrill Lynch, UBS Securities and Goldman Sachs Group. In its Securities and Exchange Commission filing, ADAH said it terminated its offer because Delphi had breached various parts of the contract agreement, including making compensation agreements with executives that were not “reasonably acceptable” and because reaching “agreements with GM (General Motors Corp.) that are materially inconsistent” with the terms of the deal. ADAH also said the consortium is owed $82.5 million from Delphi in fees and expenses incurred under the terms of the agreement.
GM reportedly is considering increasing the amount it will contribute to defray some of Delphi’s pension obligations, beyond the $1.5 billion committed to date. Melisa Tezanos, GM spokeswoman, declined to comment. Delphi’s defined benefit plan assets totaled an estimated $15 billion as of Sept. 30.
Delphi officials said in a statement today the firm had met the conditions of its restructuring plan, including securing $6.1 billion of exit financing by today’s deadline. “We are extremely disappointed that our plan investors have taken the position that they are not obligated to fund their plan investment commitments to Delphi and instead have chosen to walk away from the company and its stake holders,” John Sheehan, Delphi vice president and chief restructuring officer, said in the statement.
