Auto parts maker Delphi Corp said it would file a reorganization plan on Thursday that lays out a definitive agreement with former parent General Motors Corp and a path to exiting bankruptcy by the end of the year.
The plan was based on the $2.55 billion equity investment proposal led by Appaloosa Management LP and defines expected creditor recoveries, including offering current shareholders the right to buy stock in the reorganized company.
The plan requires approval of Delphi's creditors and the investor group led by Appaloosa. The U.S. Bankruptcy Court also must approve a disclosure statement intended to explain the plan in plain language before Delphi can solicit its approval.
Delphi also said it wants to obtain commitments for about $7 billion of exit financing by early in the fourth quarter and believes the reorganized company will be attractive to investors.
Delphi filed for bankruptcy in October 2005 and has announced plans to slash thousands of U.S. hourly workers and up to 8,500 salaried workers worldwide. The company is also exiting several business lines.
Troy, Michigan-based Delphi negotiated new contracts with a half dozen unions in the United States for the reorganization. It plans to retain eight union plants in the United States and expects to close or sell 25 North American sites overall.
The company also said it remains committed to divesting the steering, bearings and interiors businesses by the end of 2008.