Delphi exec seeks at least $3.5 billion to exit bankruptcy

Oct 03, 2008 (Detroit Free Press - McClatchy-Tribune Information Services via COMTEX) -- DPHIR | Quote | Chart | News | PowerRating -- Delphi Corp. needs $3.5 billion to $4 billion to emerge from bankruptcy protection, said Steve Miller, Delphi's executive chairman.

The Troy auto supplier, which has been restructuring in Chapter 11 for nearly three years, is going to its current investors to refinance its existing bankruptcy loans as well third parties, Miller said during the Automotive Supplier Finance Summit on Thursday at the Marriott in Troy.

Delphi plans to raise that money through a mix of debt and sale of stock in the reorganized company.

Delphi had previously sought a $6.1-billion exit loan. The company needs to raise less money, in part, because GM boosted its contribution to Delphi, which includes shifting $3.4 billion in pension debt to GM.

Lenders and investors, Miller said, want to know two things: "That the ongoing company is profitable and that the risks have been mitigated. We believe we have achieved both of those objectives in the new arrangements we have with General Motors," he told journalists.

But Delphi, which entered the credit markets last year just as the credit crunch took hold, is returning when the markets have virtually frozen, as the financial sector continues its shakeout.

"I am confident that we will get this last step done," he said during the keynote of the summit.

Separately, Miller, who was a leader in organizing the 1979-80 federal bailout of Chrysler Corp., said he supports the $700-billion proposal to buy bad debt from the nation's financial institutions to spur confidence in the economy.

"Confidence in our system and the liquidity of our capital markets are so in peril that only some full stroke will get things moving again," he said.

But Miller said he was awestruck by the proposal, put together by Treasury Secretary Henry Paulson, and the recent bailouts of AIG, as well as government takeovers of Fannie Mae and Freddie Mac.

He noted the differences between the Paulson plan and the Chrysler bailout, which required a 5-year plan detailing Chrysler's products and finances, and six months of negotiating the terms of that deal before Chrysler saw any money.

"Compare all the recent history of what's been going on to the thoughtful, carefully targeted Chrysler deal of 1980. The dollars are now hundreds of times larger, yet the governmental decision process is chaotic and panic-driven."

Contact JEWEL GOPWANI at 313-223-4550 or jgopwani@freepress.com.

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