News and Finance

NEW YORK — This, GM didn’t need.

Besides slumping U.S. sales and a strike that has shut down 30 of its factories, the automaker now may be on the financial hook to help its former subsidiary and largest parts supplier, Delphi.

Delphi’s lifeline to exit bankruptcy was stalled after a private equity fund ended a deal for a $2.55 billion cash injection on Friday.

The Appaloosa Management-led investment was an essential pillar in Delphi’s reorganization, which has been complicated by a tight credit market. The loss of the deal puts Delphi Corp.’s plan to exit bankruptcy at risk and raises the issue of whether General Motors Corp. would be forced to offer even more support than it is already giving.
"I would not be surprised to see additional forms of financial support from GM," Fitch Ratings analyst Mark Oline said. "It’s been never-ending since the initial filing."

Standard & Poor’s analyst Marc Eiger told investors that the sooner Delphi emerges from bankruptcy, the better off GM will be. He noted that GM recently increased the amount of loan money it offered to Delphi, and it "may need to provide more cash to help Delphi emerge."

As for an equity deal, Appaloosa said it was still negotiating to invest in Delphi despite its refusal to do so under the terms of the existing agreement.

GM spokeswoman Renee Rashid-Merem said it was disappointed Appaloosa had withdrawn http://abc-cashadvance.com. "There has been a tremendous amount of effort and progress made to establish the foundation that would enable Delphi to emerge from Chapter 11," she said in a statement. "GM will continue to work with the involved parties to facilitate Delphi’s efforts to emerge from bankruptcy."

Appaloosa’s announcement came as Delphi faced a Friday deadline to raise $6.1 billion in loans to help it out of bankruptcy. Delphi followed Appaloosa’s statement with its own, saying it had raised the needed loan money and was ready to do the deal but that Appaloosa had backed down.

"We are extremely disappointed that our plan investors have taken the position that they are not obligated to fund their planned investment commitments to Delphi and instead have chosen to walk away from the company and its stakeholders," Delphi’s restructuring chief, John Sheehan, said in a statement. "We are prepared to pursue actions that are in the best interests of Delphi and its stakeholders."

Delphi, which has been in bankruptcy since October 2005, offered no specifics on what those actions might be.

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