Delphi gets court OK of more lender accommodation agreement changes

By Rebecca Melvin

New York, April 23 - Delphi Corp. received approval of further changes to its debtor-in-possession accommodation agreement Thursday by the U.S. Bankruptcy Court for the Southern District of New York.

The "second accommodation amendment" effectively adjusts milestones and pushes out deadlines under the agreement to May from April, representing the third time such extensions have been sought.

The latest adjustment had their genesis last month when the U.S. Treasury auto task force moved to block increased contribution to Delphi from General Motors Corp.

"Delphi remains in negotiation with the task force, the DIP lenders, GM and the creditors regarding the developing term sheet for appropriate resolution of these cases," Delphi counsel Jack Butler of Skadden, Arps, Slate, Meagher & Flom told the court.

Under the new timetable, the company's deadline for delivering a term sheet to its DIP facility lender agent is May 4, with approval required by May 8, after which the lenders' accommodation period expires and the lenders can call back the facility.

The matter was set for hearing on May 7.

GM, the Treasury, participating lenders, creditors and Delphi all supported the amendments to the existing $4.35 billion DIP facility.

Also under the amendment, Delphi may be required to apply incremental borrowing base cash collateral to repayment of its tranche A and tranche B DIP loans on May 5 if the term sheet is not delivered on time.

Also the changes modify the covenant related to the company's minimum borrowing base cash collateral account balance and require the company to apply future interest payments due to the tranche C DIP lenders to repay the tranche A and B DIP loans until they are paid in full.

Also the amendments require Delphi to use $25 million of incremental borrowing base cash collateral to repay the tranche A and B DIP loans, add the Pension Benefit Guaranty Corp. to a list of parties that must be notified if the agent takes any enforcement action against collateral and provide for 20 basis points of additional fees and expenses to participating lenders.

As previously reported, while in bankruptcy, Delphi has been supplementing cash from operations in North America with borrowings under its DIP facility, which expired on Dec. 31.

Before the DIP facility expired, Delphi entered into the accommodation agreement, allowing it to retain the proceeds of drawn amounts under the facility, consisting of a $1.1 billion first-priority revolving credit facility, a $500 million first-priority term loan and a $2.75 billion second-priority term loan until the earlier of June 30, 2009, or May 5 if specified milestones are not met.

Following the hearing, Butler told reporters that Delphi continues to meet with the Treasury auto task force, and that the task force is "responsibly addressing all the many issues confronting it for a resolution to these cases."

Butler declined to specify whether the task force's recent focus on Chrysler affected Delphi.

He also said that he couldn't comment on the potential impact GM's planned summer shutdowns, reported in the press, might have on Delphi since "GM hasn't formally announced that yet," he said.

Delphi, a Troy, Mich.-based automotive electronics manufacturer, filed for bankruptcy on Oct. 8, 2005. Its Chapter 11 case number is 05-44481.

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