GM Generali

(The item "Delphi In Pacts To Emerge From Bankruptcy Protection," published at 12:29 p.m. EDT, incorrectly stated in the second paragraph that a previous deal fell apart in April. In fact, that previous deal fell apart in April 2008. A corrected version follows.)

 
   DOW JONES NEWSWIRES 
 

Just as former parent General Motors Corp. (GM) enters bankruptcy proceedings, Delphi Corp. (DPHIQ) reached agreements allowing it to emerge from bankruptcy protection ahead of its Tuesday deadline.

Delphi filed for bankruptcy in October 2005. It was poised to exit from Chapter 11 last year with a $2.55 billion investment by a group of investors, but they terminated the deal in April 2008. Delphi later floated a new restructuring plan but was forced to ditch it as the financial crisis set in and auto sales cratered.

In May, a judge ordered mediation for the auto supplier and key players to resolve the case. That order came after Delphi had been negotiating for nearly two months with GM, lenders and the Treasury Department's auto task force. Delphi remains one of GM's biggest suppliers.

"After an extended period of complex and challenging discussions with a wide range of stakeholders, we are confident that these modifications to our confirmed plan of reorganization will provide a resolution that will allow Delphi to emerge from Chapter 11," said President and Chief Executive Rodney O'Neal.

The auto supplier will emerge from its reorganization via a sale of assets to a Platinum Equity LLC affiliate and with the support of a GM affiliate, which will buy some of Delphi's plants. GM will provide $250 million of pre-emergence liquidity through July 31.

The plan is similar to the previously confirmed plan. However, Delphi agreed to allow Parnassus Holdings II LLC, the Platinum Equity affiliate, to operate its businesses with capital and commitments of $3.6 billion. In addition, the business will operate without the labor-related legacy costs related to the North American sites being acquired by the GM affiliate.

The delay in April 2008 prevented Delphi from funding its defined-benefit pension after emergence. Under the new plan, GM will address the hourly pension plan, but Delphi found no feasible alternatives for its salaried pension. As a result, the U.S. Pension Benefit Guaranty Corp. will likely take over the plan.

The final approval hearing is set for July 23.

Delphi shares recently trading on the Pink Sheets at 7.8 cents, down 13%.

-By Jay Miller, Dow Jones Newswires; 201-938-2331; jay.miller@dowjones.com

(David McLaughlin contributed to this report.)