Delphi Corporation Seeking Bankruptcy Loan Extension

Bankrupt former General Motor parts business Delphi Corporation is seeking an extension of up to six months for about US$4.35 billion in borrowed funds. The company reported in a regulatory filing that is meeting with investors to discuss a proposal to extend the timeframe within which the company can repay the loans, and is hoping for an extension through to June 30, 2009 or the company’s exit from court protection, whichever comes first.

The existing loan package to fund the company’s operations during bankruptcy – $1.1 billion revolving credit line, a $500 million first-priority term loan and a $2.75 billion second-priority term loan – is due to expire at the end of this year. Delphi will present investors with revised financial projections that estimate a 10 per cent drop in global vehicle production, said the filing. As a result, the company has reduced its first-half forecast for earnings before interest, taxes, depreciation, amortisation and restructuring costs from $904 million to $699 million.

Separate to this extension, Delphi is seeking around $3.75 billion in loans to finance its emergence from a three-year-old Chapter 11 case. A hearing on Delphi’s proposal to change its reorganisation plan to cut payouts to creditors is scheduled for November 5.