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Delphi files bankruptcy reorganization plan

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From Bloomberg News

Delphi Corp., the biggest U.S. auto parts maker, filed a reorganization plan Thursday that called for the company to receive as much as $7 billion in bank financing and to exit bankruptcy by Jan. 1.

The proposed plan includes a settlement that resolves all outstanding issues between Delphi and its former parent, General Motors Corp., and provides details on a rights offering for shareholders, the Troy, Mich.-based company said.

The plan must be approved by U.S. Bankruptcy Judge Robert Drain.

The filing ends a 23-month legal process started Oct. 8, 2005, when then-Chief Executive Steve Miller put Delphi’s money-losing U.S. operations under bankruptcy court protection after failing to receive financial aid from GM and wage concessions from six of its unions, including the United Auto Workers.

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Delphi is in the process of lining up the $7 billion in financing from various banks, the company said.

“I think the market will be open to high-quality debt issuers including Delphi,” said Kirk Ludtke, an analyst at CRT Capital Management in Stamford, Conn.

The plan calls for Delphi to issue new stock and pay GM $2.7 billion in cash to settle all claims the automaker has against the company.

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Delphi still plans to close, consolidate or sell 25 of 33 manufacturing sites.

GM said in an Aug. 7 filing that it expected retirement and other costs for former GM workers at Delphi to total $7 billion.

In addition, after an initial payment of $500 million, GM said it would have continuing labor-related costs of $300 million to $400 million annually for an unspecified time and “transitional” payments of an additional $100 million.

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