 |
March 5, 2008 |
|
|
|
 |
DELPHI CORP: Court Extends Effectiveness of Letters of Credit The U.S. Bankruptcy Court for the Southern District of New York has authorized Delphi Corp. and its debtor-affiliates to: (a) extend the effectiveness of the letters of credit issued by Delphi to the Pension Benefits Guaranty Corp. until April 15, 2008; and (b) increase the aggregate amount outstanding under the PBGC Letters of Credit by an additional US$10 million. As reported in the Troubled Company Reporter-Europe on May 23, 2007, the Debtors sought and obtained the Court's permission to perform under two sets of pension funding waivers issued by the United States Internal Revenue Service and provide the PBGC with letters of credit in connection with the IRS Waivers. The PBGC Letters of Credit may be drawn upon by the PBGC in favor of the Debtors' pension plans in the event the conditions set forth in the IRS Waivers are not satisfied. The IRS Waivers' main purpose was to facilitate the transfer of certain of the Debtors' hourly pension obligations to General Motors Corp. under Section 414(l) of the Internal Revenue Code, as set forth in the Debtors' confirmed Joint Plan of Reorganization. Under the First Waivers, the IRS waived the minimum funding requirements for Delphi's pension plan year ended Sept. 30, 2006. Under the Second Waivers, the IRS temporarily waived Delphi's minimum funding obligations concerning Delphi's hourly pension plan for the pension plan year ended Sept. 30, 2007. In return, the Debtors committed to make: * an accelerated US$10 million contribution to the Delphi Hourly Plan upon their emergence from Chapter 11; * a US$10 million contribution to the Hourly Plan as a partial prepayment of Delphi's post-emergence minimum funding obligations; and * a US$20 million contribution to the Hourly Plan within five days after the Effective Date of their Joint Plan of Reorganization. By their terms, the IRS Waivers will expire if Delphi has not emerged from Chapter 11 by Feb. 29, 2008. If the Waivers are permitted to expire, the Debtors may face an excise tax claim aggregating more US$1.4 billion for the pension plan year ended Sept. 30, 2006, John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, notes. In addition, for the pension plan year ended Sept. 30, 2007, the Debtors will have to make redundant cash contributions that will result in projected overfunding of the Hourly Plan. The Debtors are unlikely to emerge from Chapter 11 by Feb. 29, 2008. Consequently, the Debtors initiated discussions with the PBGC to extend the expiration date for the IRS Waivers. After arm's-length negotiations, the PBGC agreed to recommend to the IRS that the IRS Waivers be extended from Feb. 29, 2008, through and including March 31, 2008, in exchange for (i) the extension of the PBGC Letters of Credit from March 15, 2008, through and including April 15, 2008; and (ii) a US$10 million increase in the aggregate amount outstanding under the Letters from US$150 million to US$160 million. On Feb. 27, 2008, IRS and the PBGC extended the IRS Waivers until March 31, 2008, Delphi Corp. vice president and chief restructuring officer John D. Sheehan disclosed in a regulatory filing with the U.S. Securities and Exchange Commission. The PBGC Settlement is fair, equitable, in the best interests of the Debtors and their estates, Mr. Butler avers. He maintains that the Settlement will assist the Debtors in efficiently effecting the Section 414(l) Transfer of the Hourly Plan to GM, and allow Delphi to emerge from Chapter 11 successfully. About Delphi Corp. Headquartered in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/ -- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed US$11,446,000,000 in total assets and US$23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. (Delphi Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000) * * * As previously reported in the Troubled Company Reporter-Europe, Moody's Investors Service assigned ratings to Delphi Corporation for the company's financing for emergence from Chapter 11 bankruptcy protection: Corporate Family Rating of (P)B2; US$3.7 billion of first lien term loans, (P)Ba3; and US$0.825 billion of 2nd lien term debt, (P)B3. In addition, a Speculative Grade Liquidity rating of SGL-2 representing good liquidity was assigned. The outlook is stable. Standard & Poor's Ratings Services in the meantime said it expects to assign its 'B' corporate credit rating to Delphi upon the company's emergence from Chapter 11 bankruptcy protection, which may occur by the end of the first quarter of 2008. S&P expects the outlook to be negative. In addition, Standard & Poor's expects to assign these issue-level ratings: a 'B+' issue rating (one notch above the corporate credit rating), and '2' recovery rating to the company's proposed US$3.7 billion senior secured first-lien term loan; and a 'B-' issue rating (one notch below the corporate creditrating), and '5' recovery rating to the company's proposed US$825 million senior secured second-lien term loan. |
|
|
||
|
Today's Top Stories have been selected from the Troubled Company Reporter - Europe. To receive the Full TCR-EUR please CLICK HERE.
