DETROIT Delphi Corp. said Monday it has scrapped its agreement with a group of investors that was going to kick in up to $3.4 billion to help the struggling auto parts maker emerge from Chapter 11 bankruptcy protection.
But a spokesman for the company said a revised agreement is expected later this month, and the move to end the agreement was due to one of the investors, Cerberus Capital Management LP, pulling out of the deal.
We believe that the remaining plan investors will continue to be part of a new framework agreement, said Delphi spokesman Lindsey Williams. Whenever you have a change in the makeup of that group, it would require a new agreement.
Williams said Delphi s board of directors will meet July 16 to consider these matters, but he would not say if a new agreement would be voted on at that time.
Ending the agreement is not expected to stop the company from getting out of Chapter 11 by the end of the year, Williams said.
Delphi announced in December that a group of investors led by Cerberus would inject badly needed capital into the Troy-based company, the former parts arm of General Motors Corp. until it was spun off in 1999.
Delphi said in April that it had been told Cerberus would pull out of the deal. The move came shortly before Cerberus bought an 80 percent stake in Chrysler Group from DaimlerChrysler AG.
Cerberus move left Appaloosa Management LP, Harbinger Capital Partners Master Fund I, Merrill Lynch & Co. and UBS Securities LLC as the remaining investors.
It is Delphi s belief that Appaloosa and Harbinger remain committed to a transaction with Delphi that will maximize stakeholder recoveries and permit the company to make an expeditious exit from chapter 11, Williams said.
Before the Cerberus move, Delphi had planned to emerge from Chapter 11 by the end of June, but the company said in mid-April that would be delayed until the second half of the year.
The original agreement with the investors was contingent on Delphi reaching a wage-and-benefit-cutting agreement with its unions.
Last month, United Auto Workers members approved a deal that allows some plant closings, keeps others open and cuts wages for longtime workers from around $27 per hour to a pay range for everyone that runs from $14 to $18.50.
GM would subsidize the wages and pay other costs for longtime employees under the deal, and it also will operate or find a third party to run several Delphi plants.
The UAW is Delphi s largest union, representing 17,000 of its 20,000 U.S. hourly workers. Delphi said Monday it is working to conclude negotiations with its remaining unions as quickly as possible. About 3,000 Delphi workers are represented by other unions.
Appaloosa founder and President David Tepper would not comment last month when asked if the UAW deal was enough for his company to invest in Delphi.
Delphi said in a bankruptcy court filing that it expects to have as few as about 2,300 UAW members at its four remaining UAW plants by 2012.
Read more in later editions of The Blade and toledoblade.com.