The Appaloosa-led group notified Delphi on Friday that it had terminated the proposed investment, the same day Delphi had expected to begin the final steps of emerging from bankruptcy.
DETROIT (Reuters) - Delphi Corp <DPHIQ.PK> said on Wednesday it may ask the U.S. Bankruptcy Court to force equity investors led by Appaloosa Management LP to go through with a $2.55 billion investment plan to support the auto parts maker's exit from bankruptcy.
The Appaloosa-led group notified Delphi on Friday that it had terminated the proposed investment, the same day Delphi had expected to begin the final steps of emerging from bankruptcy.
The abrupt halt to the emergence process dealt a blow to Delphi and General Motors Corp <GM.N>, which has been looking forward to capping its financial exposure to its former parts subsidiary and cutting its parts procurement costs.
Delphi's board has formed a special litigation committee and engaged independent legal counsel to consider possible legal remedies, including asking the court to force the investors to complete the plan, Delphi said in a filing with federal securities regulators.
!ADVERTISEMENT!The plan called for the investors to buy up to $800 million of convertible preferred stock and $175 million of common stock in a reorganized Delphi, and any unsubscribed shares from a $1.6 billion rights offering to unsecured creditors.
A representative of Appaloosa, which is led by billionaire investor David Tepper, could not be reached immediately for comment. Appaloosa has said that it would still consider an investment in Delphi under different terms.
Analysts had predicted the equity plan -- developed before the latest downturn in U.S. auto sales and the deepest of the credit market turmoil -- would not be executed as is and force a further delay in Delphi's emergence from bankruptcy.
If the plan is not executed, Delphi may need an even deeper contribution from GM, which already has booked $7.5 billion of charges for its exposure to Delphi and has agreed to provide up to $2.8 billion of Delphi's $6.1 billion exit financing.
Also on Wednesday, Delphi said the Internal Revenue Service and the Pension Benefit Guaranty Corp have extended until May 9 waivers that allow the company to defer contributions to its pension funds until its emergence from bankruptcy.
Those waivers had been granted in exchange for Delphi agreeing to extend and increase the terms of letters of credit it granted to the PBGC.
(Reporting by David Bailey, editing by Phil Berlowitz)
