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GM to provide loans to Delphi
NEW YORK (AP) -- General Motors Corp. agreed Wednesday to offer two loans worth almost $3 billion to help Delphi Corp. emerge from bankruptcy since the auto parts maker has struggled to secure the financing it needs.
GM (GM, Fortune 500) said it would take a $2 billion first-lien term note and any unsubscribed portion of a $825 million second-lien term loan.
"A great deal of effort has gone into developing a framework to aid Delphi's emergence," GM said in a statement. "GM's willingness to take an expanded role in Delphi's exit financing represents another step GM is taking toward that end."
Delphi, which was GM's auto parts division until a 1999 spin-off, has struggled to get a total loan package worth $6.1 billion as credit markets went into turmoil in the wake of the subprime housing crisis.
GM is highly dependent on Delphi for parts, forcing it to find a solution as a March 31 deadline approached to secure the loans or possibly lose an equity investment deal that is also crucial to a Chapter 11 exit. That deadline was extended to April 5 on Wednesday.
The exit financing package also includes a $1.6 billion asset-backed revolving credit facility and at least $1.7 billion of a first-lien term loan.
Delphi's efforts to get loans have been hampered by part of an equity investment deal with the Appaloosa Management hedge fund that limits the amount of interest income Delphi can pay on the loans, making it less attractive for lenders to sign up. Further, the company's two lead loan arrangers are not required to take any unsubscribed loans.
Appaloosa is joined by five other equity investors: Harbinger Capital Partners Master Fund I Ltd.; Merrill Lynch, Pierce, Fenner & Smith Inc.; UBS Securities LLC; Pardus Capital Management LP, and Goldman Sachs Group Inc.
The investors are split over whether to take the GM financing, so Delphi will ask a judge to confirm later this week that the terms of the proposed exit financing comply with the plan. The company did not disclose which investors objected.
http://money.cnn.com/2008/03/06/news/companies/gm_delphi.ap/index.htm?source=yahoo_quote
NEW YORK (AP) -- General Motors Corp. agreed Wednesday to offer two loans worth almost $3 billion to help Delphi Corp. emerge from bankruptcy since the auto parts maker has struggled to secure the financing it needs.
GM (GM, Fortune 500) said it would take a $2 billion first-lien term note and any unsubscribed portion of a $825 million second-lien term loan.
"A great deal of effort has gone into developing a framework to aid Delphi's emergence," GM said in a statement. "GM's willingness to take an expanded role in Delphi's exit financing represents another step GM is taking toward that end."
Delphi, which was GM's auto parts division until a 1999 spin-off, has struggled to get a total loan package worth $6.1 billion as credit markets went into turmoil in the wake of the subprime housing crisis.
GM is highly dependent on Delphi for parts, forcing it to find a solution as a March 31 deadline approached to secure the loans or possibly lose an equity investment deal that is also crucial to a Chapter 11 exit. That deadline was extended to April 5 on Wednesday.
The exit financing package also includes a $1.6 billion asset-backed revolving credit facility and at least $1.7 billion of a first-lien term loan.
Delphi's efforts to get loans have been hampered by part of an equity investment deal with the Appaloosa Management hedge fund that limits the amount of interest income Delphi can pay on the loans, making it less attractive for lenders to sign up. Further, the company's two lead loan arrangers are not required to take any unsubscribed loans.
Appaloosa is joined by five other equity investors: Harbinger Capital Partners Master Fund I Ltd.; Merrill Lynch, Pierce, Fenner & Smith Inc.; UBS Securities LLC; Pardus Capital Management LP, and Goldman Sachs Group Inc.
The investors are split over whether to take the GM financing, so Delphi will ask a judge to confirm later this week that the terms of the proposed exit financing comply with the plan. The company did not disclose which investors objected.
http://money.cnn.com/2008/03/06/news/companies/gm_delphi.ap/index.htm?source=yahoo_quote
