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0000950134-07-000570.txt : 20070112
0000950134-07-000570.hdr.sgml : 20070112
20070112171600
ACCESSION NUMBER: 0000950134-07-000570
CONFORMED SUBMISSION TYPE: SC 13D/A
PUBLIC DOCUMENT COUNT: 3
FILED AS OF DATE: 20070112
DATE AS OF CHANGE: 20070112
GROUP MEMBERS: HIGHLAND CREDIT STRATEGIES FUND
GROUP MEMBERS: HIGHLAND MULTI-STRATEGY MASTER FUND LP
GROUP MEMBERS: HIGHLAND MULTI-STRATEGY ONSHORE MASTER SUBFUND LLC
GROUP MEMBERS: JAMES DONDERO
GROUP MEMBERS: STRAND ADVISORS INC
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: DELPHI CORP
CENTRAL INDEX KEY: 0001072342
STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714]
IRS NUMBER: 383430473
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13D/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-56957
FILM NUMBER: 07529452
BUSINESS ADDRESS:
STREET 1: 5725 DELPHI DRIVE
CITY: TROY
STATE: MI
ZIP: 48098
BUSINESS PHONE: 248-813-2000
MAIL ADDRESS:
STREET 1: 5725 DELPHI DRIVE
CITY: TROY
STATE: MI
ZIP: 48098
FORMER COMPANY:
FORMER CONFORMED NAME: DELPHI AUTOMOTIVE SYSTEMS CORP
DATE OF NAME CHANGE: 19981020
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: HIGHLAND CAPITAL MANAGEMENT LP
CENTRAL INDEX KEY: 0001167365
IRS NUMBER: 752716725
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13D/A
BUSINESS ADDRESS:
STREET 1: 13455 NOEL ROAD STE 1300
CITY: DALLAS
STATE: TX
ZIP: 75240
BUSINESS PHONE: 9726284100
MAIL ADDRESS:
STREET 1: 13455 NOEL ROAD STE 1300
CITY: DALLAS
STATE: TX
ZIP: 75240
SC 13D/A
1
d42722sc13dza.htm
AMENDMENT TO SCHEDULE 13D
sc13dza
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OMB APPROVAL |
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OMB Number: 3235-0145 |
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Expires: February 28, 2009
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2 )*
(Name of Issuer)
Common Stock, $0.01 par value per share
(Title of Class of Securities)
(CUSIP Number)
J. Kevin Ciavarra, Esq.
Highland Capital Management, L.P.
Two Galleria Tower
13455 Noel Road, Suite 800
Dallas, Texas 75240
(972) 628-4100
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting persons initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be filed for the purpose of Section 18 of the Securities Exchange Act of 1934 (Act) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.
TABLE OF CONTENTS
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CUSIP No. |
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247126105 |
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Page |
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2 |
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of |
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11 |
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1 |
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NAMES OF REPORTING PERSONS:
Highland Capital Management, L.P., a Delaware limited partnership |
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I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY): |
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75-2716725 |
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2 |
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
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(a) o |
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(b) o |
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3 |
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SEC USE ONLY: |
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4 |
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SOURCE OF FUNDS (SEE INSTRUCTIONS): |
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AF |
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5 |
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e): |
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o |
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6 |
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CITIZENSHIP OR PLACE OF ORGANIZATION: |
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Delaware
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7 |
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SOLE VOTING POWER: |
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NUMBER OF |
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38,984,132 |
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SHARES |
8 |
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SHARED VOTING POWER: |
BENEFICIALLY |
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OWNED BY |
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5,272,783 |
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EACH |
9 |
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SOLE DISPOSITIVE POWER: |
REPORTING |
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PERSON |
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38,984,132 |
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WITH |
10 |
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SHARED DISPOSITIVE POWER: |
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5,272,783 |
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11 |
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: |
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44,256,915 |
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12 |
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CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): |
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o
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13 |
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): |
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7.9% |
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14 |
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TYPE OF REPORTING PERSON (SEE INSTRUCTIONS): |
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PN, IA |
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CUSIP No. |
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247126105 |
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Page |
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3 |
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of |
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11 |
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1 |
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NAMES OF REPORTING PERSONS:
Strand Advisors, Inc., a Delaware corporation |
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I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY): |
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95-4440863 |
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2 |
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
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(a) o |
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(b) o |
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3 |
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SEC USE ONLY: |
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4 |
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SOURCE OF FUNDS (SEE INSTRUCTIONS): |
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AF |
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5 |
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e): |
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o |
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6 |
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CITIZENSHIP OR PLACE OF ORGANIZATION: |
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Delaware
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7 |
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SOLE VOTING POWER: |
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NUMBER OF |
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38,984,132 |
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SHARES |
8 |
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SHARED VOTING POWER: |
BENEFICIALLY |
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OWNED BY |
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5,272,783 |
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EACH |
9 |
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SOLE DISPOSITIVE POWER: |
REPORTING |
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PERSON |
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38,984,132 |
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WITH |
10 |
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SHARED DISPOSITIVE POWER: |
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5,272,783 |
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11 |
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: |
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44,256,915 |
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12 |
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CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): |
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o
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13 |
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): |
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7.9% |
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14 |
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TYPE OF REPORTING PERSON (SEE INSTRUCTIONS): |
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CO |
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CUSIP No. |
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247126105 |
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Page |
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4 |
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of |
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11 |
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1 |
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NAMES OF REPORTING PERSONS:
James D. Dondero |
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I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY): |
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2 |
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
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(a) o |
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(b) o |
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3 |
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SEC USE ONLY: |
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4 |
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SOURCE OF FUNDS (SEE INSTRUCTIONS): |
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AF, PF |
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5 |
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e): |
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o |
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6 |
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CITIZENSHIP OR PLACE OF ORGANIZATION: |
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United States of America
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7 |
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SOLE VOTING POWER: |
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NUMBER OF |
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44,078,632 |
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SHARES |
8 |
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SHARED VOTING POWER: |
BENEFICIALLY |
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OWNED BY |
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5,472,783 |
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EACH |
9 |
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SOLE DISPOSITIVE POWER: |
REPORTING |
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PERSON |
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44,078,632 |
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WITH |
10 |
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SHARED DISPOSITIVE POWER: |
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5,472,783 |
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11 |
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: |
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49,551,415 |
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12 |
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CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): |
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o
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13 |
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): |
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8.8% |
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14 |
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TYPE OF REPORTING PERSON (SEE INSTRUCTIONS): |
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IN |
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CUSIP No. |
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247126105 |
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Page |
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5 |
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of |
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11 |
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1 |
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NAMES OF REPORTING PERSONS:
Highland Credit Strategies Fund, a Delaware trust (1) |
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I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY): |
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20-4948762 |
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2 |
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
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(a) o |
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(b) þ |
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3 |
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SEC USE ONLY: |
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4 |
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SOURCE OF FUNDS (SEE INSTRUCTIONS): |
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WC |
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5 |
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e): |
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o |
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6 |
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CITIZENSHIP OR PLACE OF ORGANIZATION: |
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Delaware
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7 |
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SOLE VOTING POWER: |
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NUMBER OF |
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0 |
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SHARES |
8 |
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SHARED VOTING POWER: |
BENEFICIALLY |
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OWNED BY |
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3,653,116 |
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EACH |
9 |
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SOLE DISPOSITIVE POWER: |
REPORTING |
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PERSON |
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0 |
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WITH |
10 |
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SHARED DISPOSITIVE POWER: |
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3,653,116 |
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11 |
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: |
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3,653,116 |
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12 |
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CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): |
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o
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13 |
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): |
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0.7% |
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14 |
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TYPE OF REPORTING PERSON (SEE INSTRUCTIONS): |
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OO |
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(1) |
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The Reporting Persons may be deemed to be the beneficial owners of the shares of the Issuers Common Stock beneficially owned by the other Reporting Persons. However, Highland Credit Strategies Fund will not provide any financing or participate in the Proposal described in Item 4 hereto, so Highland Credit Strategies Fund expressly disclaims membership in a group with the other Reporting Persons with respect to the Proposal and other related matters described herein. |
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CUSIP No. |
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247126105 |
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Page |
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6 |
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of |
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11 |
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1 |
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NAMES OF REPORTING PERSONS:
Highland Multi-Strategy Onshore Master SubFund, L.L.C., a Delaware limited liability company |
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I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY): |
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20-5237162 |
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2 |
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
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(a) o |
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(b) o |
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3 |
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SEC USE ONLY: |
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4 |
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SOURCE OF FUNDS (SEE INSTRUCTIONS): |
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WC |
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5 |
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e): |
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o |
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6 |
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CITIZENSHIP OR PLACE OF ORGANIZATION: |
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Delaware
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7 |
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SOLE VOTING POWER: |
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NUMBER OF |
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0 |
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SHARES |
8 |
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SHARED VOTING POWER: |
BENEFICIALLY |
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OWNED BY |
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1,619,667 |
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EACH |
9 |
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SOLE DISPOSITIVE POWER: |
REPORTING |
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PERSON |
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0 |
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WITH |
10 |
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SHARED DISPOSITIVE POWER: |
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1,619,667 |
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11 |
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: |
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1,619,667 |
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12 |
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CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): |
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o
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13 |
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): |
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0.3% |
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14 |
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TYPE OF REPORTING PERSON (SEE INSTRUCTIONS): |
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OO |
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CUSIP No. |
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247126105 |
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Page |
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7 |
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of |
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11 |
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1 |
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NAMES OF REPORTING PERSONS:
Highland Multi-Strategy Master Fund, L.P., a Bermuda limited partnership |
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I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY): |
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2 |
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
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(a) o |
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(b) o |
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3 |
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SEC USE ONLY: |
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4 |
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SOURCE OF FUNDS (SEE INSTRUCTIONS): |
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WC |
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5 |
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e): |
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o |
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6 |
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CITIZENSHIP OR PLACE OF ORGANIZATION: |
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Bermuda
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7 |
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SOLE VOTING POWER: |
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NUMBER OF |
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0 |
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SHARES |
8 |
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SHARED VOTING POWER: |
BENEFICIALLY |
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OWNED BY |
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1,619,667 |
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EACH |
9 |
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SOLE DISPOSITIVE POWER: |
REPORTING |
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PERSON |
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0 |
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WITH |
10 |
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SHARED DISPOSITIVE POWER: |
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1,619,667 |
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11 |
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: |
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1,619,667 |
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12 |
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CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS): |
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o
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13 |
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): |
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0.3% |
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14 |
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TYPE OF REPORTING PERSON (SEE INSTRUCTIONS): |
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PN |
This Amendment No. 2 to Schedule 13D relates to the common stock, par value $0.01 per
share (Common Stock), of Delphi Corporation, a Delaware corporation (the
Issuer), and is being filed on behalf of (i) Highland Capital Management L.P., a Delaware
limited partnership (Highland Capital); (ii) Strand Advisors, Inc., a Delaware
corporation (Strand); (iii) James D. Dondero; (iv) Highland Credit Strategies Fund, a
Delaware trust (HCF); (v) Highland Multi-Strategy Onshore Master SubFund, L.L.C., a
Delaware limited liability company (SubFund); and (vi) Highland Multi-Strategy Master
Fund, L.P., a Bermuda limited partnership (Master Fund and, collectively, the
Reporting Persons), to amend the Schedule 13D that was originally filed with the
Securities and Exchange Commission (the Commission) on December 22, 2006, as amended by
Amendment No. 1 to Schedule 13D filed with the Commission on January 5, 2007.
Except as set forth below, all previous Items are unchanged. Capitalized terms used herein
which are not defined herein have the meanings given to them in the Schedule 13D previously filed
with the Commission.
Item 4. Purpose of Transaction.
Item 4 is supplemented as follows:
On January 9, 2007,
Highland Capital delivered a letter to the Board of Directors of the
Issuer, a copy of which is attached hereto as Exhibit 4 (the Letter to the
Board) and incorporated by reference herein, in order to inform the Board of Directors of the actions that Highland Capital has
been taking in furtherance of and with respect to the Proposal. As indicated in the Letter to the
Board, Highland Capital believes the Proposal (i) provides a superior alternative to the
Appaloosa/Cerberus Proposal, (ii) is in the best interests of the Issuer and its various creditors,
stockholders and other parties in interest, and (iii) sets forth a transaction that should be
seriously considered by the Board of Directors and its financial advisors and that this Proposal is
should not only be approved by the Board of Directors, but should be implemented.
The Letter to the Board also explains that Highland Capital has expended tremendous efforts in
a very short time period with respect to the Proposal, but believes that the response it has
received from the Issuer and its representatives to date has been less than receptive to allow the
Issuer to properly consider the Proposal. For example, the Letter to the Board highlights that
Highland Capital and the Issuer have negotiated the terms of a Confidentiality Agreement for ten
days, but the Issuers management and legal counsel insist upon including standstill provisions
which would require Highland Capital to stop the steps it has begun to take in furtherance of the
Proposal and significantly delay, if not prevent, Highland Capital from being able to consummate
the Proposal.
Further, the Letter to the Board explains that in order to proceed with the Proposal
expeditiously and efficiently, Highland Capital has (i) hired a financial advisor in connection
with a potential restructuring transaction involving the Issuer, (ii) delivered a legal, financial
and insurance due diligence request list, and (iii) begun discussions with automotive industry and
union experts that could act as a liaison with General Motors and the unions. As such, with the
Issuers cooperation, Highland Capital is willing to consummate the Proposal expeditiously and
within the same timetable as the Appaloosa/Cerberus Proposal. However, Highland Capital cannot
proceed without a Confidentiality Agreement. Therefore, Highland Capital has requested that the
Board of Directors instruct management to cooperate with Highland Capital so the Board of Directors
has the opportunity to consider fully and discuss both proposals with its financial advisors before
proceeding with a transaction that is not in the best interest of all of the stakeholders.
The Letter to the Board also addresses the Issuers request to evaluate Highland Capitals
involvement in (i) certain disputes with General Motors Corporation regarding Amcast Industrial
Corporation, (ii) certain disputes with the former board of directors of Motient Corporation, and
(iii) various lawsuits cited by Motient involving Highland Capital and/or James D. Dondero and
third parties. Although Highland Capital believes these types of questions inappropriately shift
the focus away from the deficiencies of the Appaloosa/Cerberus Proposal when
8
compared to the Proposal, Highland Capital provided the requested additional information to
address these concerns to the extent possible, given that some of the matters relate to ongoing
litigation.
As explained in the Letter to the Board, over the years, many of the debt issuers in which
Highland Capital and its affiliates have invested have filed for bankruptcy and Highland Capital,
and its affiliates, like other similarly structured distressed investment managers, have simply
sought to protect their interests (and others who are similarly situated) through the U.S.
bankruptcy system and through court proceedings. Many of the suits Highland Capital is party to
relate to bankruptcy-related proceedings arising from Highland Capitals normal distressed
investment-related activities. The fact that Highland Capital is a party to various proceedings
demonstrates its commitment to its investors and the companies in which it invests, along with its
desire to maximize investment returns. These are all goals that are synonymous with what the Issuer
and the Board of Directors are attempting to achieve for stockholders. Given Highland Capitals
thirteen plus years of operation, and its over $35 billion in assets under management, Highland
Capital views its involvement in these lawsuits as inconsequential and unremarkable.
On January 9, 2007, Highland Capital also delivered drafts to the Issuer of the New Equity
Agreement and the New Plan Agreement to illustrate Highland Capitals commitment to proceeding
quickly with a transaction and to evidence that the terms under which Highland Capital is prepared
to proceed are substantially similar to the terms of the Appaloosa/Cerberus Proposal.
Further, Highland Capital has engaged Loughlin Meghji & Company to provide consulting and
financial advisory services in connection with the Proposal. In addition, Highland Capital has
engaged Peter Pestillo, a former Ford Motor Company executive, as its advisor in connection with
the Proposal.
In a hearing which began
on January 11, 2007, and concluded on January 12, 2007, the United
States Bankruptcy Court for the Southern District of New York heard the Issuers motion seeking
Bankruptcy Court approval of the equity investment and plan framework agreements underlying the
Appaloosa/Cerberus Proposal. Highland Capital appeared at such hearing and argued that the Issuer should be obligated
to discuss and consider alternative plan arrangements, including the Proposal. However, on
January 12, 2007, the Bankruptcy Court for the Southern District of New York approved the definitive documentation
underlying the Appaloosa/Cerberus Proposal.
Highland Capital is disappointed by such ruling. Highland Capital believes the Appaloosa/Cerberus
Proposal approved today is unfair, because it gives Appaloosa and Cerberus disproportionate equity
ownership in the Issuer and a value transfer of approximately $1 billion at the expense of the
Issuers current stockholders. Highland Capital also believes that the Appaloosa/Cerberus Proposal
is unjust because it allocates equity ownership and upside before any deal is struck with the
unions or GM. However, Highland Capital appreciates that the Bankruptcy Court stated it believes
that Highland Capital has made a bona fide proposal. Highland Capital believes it is clear that
the Proposal is superior and fair in that it pays all creditor claims in full and in cash, retains
equity value for the Issuers common shareholders and establishes good corporate governance at the
company. Highland Capital will now consider all of its options related
to its significant investment in the Issuer and reserves the right to pursue alternative courses of
action, including actions that could involve one or more of the types of transactions or have one
or more of the results described in paragraphs (a) through (j) of Item 4 of Schedule 13D or
formulate and implement plans or proposals with respect to any of the actions described in the
Schedule 13D filed with the Commission on December 22, 2006.
Item 7. Material to be Filed as Exhibits.
Item 7 is hereby supplemented as follows:
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Exhibit 4 |
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Letter from Highland Capital Management, L.P., dated January 9, 2007, to the
Board of Directors of Delphi Corporation. |
9
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, the undersigned
certifies that the information set forth in this Schedule 13D is true, complete and correct.
Date: January 12, 2007
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Highland Credit Strategies Fund
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By: |
/s/ James Dondero
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Name: |
James Dondero |
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Title: |
President |
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Highland Capital Management, L.P.
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By: |
Strand Advisors, Inc., its general partner
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By: |
/s/ James Dondero
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Name: |
James Dondero |
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Title: |
President |
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Strand Advisors, Inc.
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By: |
/s/ James Dondero
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Name: |
James Dondero |
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Title: |
President |
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James Dondero
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/s/ James Dondero
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10
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Highland Multi-Strategy Onshore Master SubFund,
L.L.C. |
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By:
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Highland Multi-Strategy Master Fund, L.P., its managing
member |
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By:
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Highland
Multi-Strategy Fund GP, L.P., its general partner |
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By:
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Highland
Multi-Strategy Fund GP, L.L.C., its general partner |
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By:
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Highland Capital Management, L.P., its sole member |
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By:
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Strand Advisors, Inc., its general partner |
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By: |
/s/ James Dondero
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Name: |
James Dondero |
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Title: |
President |
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Highland Multi-Strategy Master Fund, L.P.
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By:
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Highland
Multi-Strategy Fund GP, L.P., its general partner |
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By:
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Highland
Multi-Strategy Fund GP, L.L.C., its general partner |
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By:
By:
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Highland Capital Management, L.P., its sole member
Strand Advisors, Inc., its general partner |
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By: |
/s/ James Dondero
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Name: |
James Dondero |
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Title: |
President |
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11
EXHIBITS
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Exhibit 1
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Letter from Highland Capital Management, L.P., dated December 21, 2006, to the Board
of Directors of Delphi Corporation (Exhibit 1 to Schedule 13D filed with the Securities
and Exchange Commission on December 22, 2006 and incorporated by reference herein).
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Exhibit 2
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Joint Filing Agreement, dated as of December 22, 2006, by
and between the Reporting Persons (Exhibit 2 to Schedule
13D filed with the Securities and Exchange Commission on
December 22, 2006 and incorporated by reference herein). |
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Exhibit 3
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Letter from Highland Capital Management, L.P., dated
December 29, 2006, to the Board of Directors of Delphi
Corporation (Exhibit 3 to Amendment No. 1 to Schedule 13D
filed with the Securities and Exchange Commission on
January 5, 2007 and incorporated by reference herein). |
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Exhibit 4
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Letter from Highland Capital Management, L.P., dated
January 9, 2007, to the Board of Directors of Delphi
Corporation. |
EX-99.4
2
d42722exv99w4.htm
LETTER
exv99w4
EXHIBIT 4
13455 Noel Road, Suite 800
Two Galleria Tower
Dallas, TX 75240
January 9, 2007
Via E-mail
Board of Directors
Delphi Corporation
5725 Delphi Drive
Troy, Michigan 48098
Gentlemen:
We wanted to take this opportunity to inform you of the actions that Highland Capital
Management, L.P. (Highland Capital) has been taking, on behalf of itself and certain of its
affiliates and related entities, in furtherance of and with respect to that certain binding
proposal and commitment (the Proposal) for a purchase of common equity to Delphi Corporation
(Delphi) and certain of its United States subsidiaries and affiliates (collectively, the
"Company) that are Chapter 11 Debtors in Possession in the United States Bankruptcy Court for the
Southern District of New York (the Bankruptcy Court) as set forth in the binding Proposal and
Commitment Letter for up to $4.7 Billion Common Equity Commitment, dated as of December 21, 2006
(the Commitment Letter).
As stated in the Commitment Letter, we believe the Proposal provides a superior alternative to
the proposal (the Appaloosa/Cerberus Proposal) made by Appaloosa Management, L.P., Cerberus
Capital Management, L.P., Harbinger Capital Partners Master Fund I, Ltd., Merrill Lynch & Co. and
UBS Securities, LLC. and supported by Delphi. We believe the Proposal is in the best interests of
the Company and its various creditors, stockholders and other parties in interest, including, most
importantly, its common stockholders. The deficiencies in the Appaloosa/Cerberus Proposal were
highlighted in our Commitment Letter and have been further highlighted by the objections to the
Appaloosa/Cerberus Proposal filed with the Bankruptcy Court by numerous parties in interest. We
believe the Proposal sets forth a transaction that should be seriously considered by the Board of
Directors and its financial advisors and that actions should be implemented by the Company in order
to make sure this Proposal is not only approved by the Board of Directors but implemented.
Although we have expended tremendous efforts in a very short time period, we believe the
responses we have received from the Company and its representatives to date have been less than
receptive for the Company to be able to properly consider our Proposal. In particular, for the
past ten days, we have attempted to enter into a fair and reasonable confidentiality and
nondisclosure agreement, but the Companys management and legal counsel have insisted upon the
inclusion of standstill provisions that we believe are inappropriate given the nature of the
Proposal and the on-going proceedings in the Bankruptcy Court. Although we have been able to agree
upon the necessary confidentiality provisions, the standstill provisions being proposed by the
Company and its legal counsel would mean that Highland Capital would have to stop the steps that it
has begun to take in furtherance of the Proposal and significantly delay, if not prevent, Highland
Capital from being able to consummate the Proposal. We have even delivered an executed
confidentiality agreement in a form that we believe is fair
and reasonable to the Company in an attempt to move the process forward and will be sending
another revised draft of the confidentiality agreement to the Companys legal counsel (in response
to a draft we received late last night) today that we believe will more accurately reflect the
agreements reached by the Company and Highland Capital on Sunday, January 7, 2007. Additionally,
in furtherance of our Proposal, please also note that our counsel today is providing drafts of the
Equity Purchase and Commitment Agreement and the Plan Framework and Support Agreement to the
Company and its counsel. We believe these agreements demonstrate the superior nature of the
Proposal and our commitment to proceed expeditiously to definitive documentation.
In order to proceed expeditiously and efficiently with respect to our Proposal, we have hired
Loughlin Meghji & Company as a consulting financial advisor. Additionally, we promptly delivered
legal, financial and insurance due diligence request lists on Friday, January 5, 2007 to the
Company and its counsel and stated in writing our willingness and ability (starting this weekend)
to complete such due diligence within sixty (60) days of the date that the Company first makes the
information available to us. Further, we have already begun discussions with automotive industry
and union experts that could serve as a liaison with both General Motors Corporation and the
unions. With the appropriate level of cooperation from the Company and its management, we are
ready, willing and able to consummate the Proposal expeditiously and within the Companys timetable
and the same timetable as the Appaloosa/Cerberus Proposal (given their unilateral due diligence
out), although we can not proceed without a confidentiality agreement. We hope that our recent
actions demonstrate our continued commitment to the Proposal and respectfully request that the
Board instruct the Company and its management to cooperate with us (starting with the execution of
an appropriate confidentiality agreement) in order to ensure that the Board has the opportunity to
consider fully and discuss both proposals with its advisors before proceeding with a transaction
that is not in the best interests of all stakeholders of the Company.
There have been suggestions made by the Company and its counsel that the Proposal is not
executable. Again, Highland Capital does not agree with this assessment and has addressed each
concern when raised. With respect to new concerns that were just raised in an e-mail message to
our counsel on Monday, January 8, 2007, Company counsel indicated that you are interested in
evaluating Highland Capitals involvement in (i) certain disputes with General Motors Corporation
(GM) regarding Amcast Industrial Corporation (Amcast), (ii) certain disputes with the former
board of directors of Motient Corporation (Motient), and (iii) various lawsuits cited by Motient
involving Highland Capital and/or James D. Dondero and third parties. We cannot understand what
these concerns have to do with our Proposal. Instead, we believe these types of questions
inappropriately shift the focus away from the deficiencies of the Appaloosa/Cerberus Proposal when
compared to the Proposal. However, we provide the following additional information with respect to
this request to address these concerns. Please note that we cannot reveal all of the specific
details of each, as many of the matters are ongoing. Additionally, the information we are
providing you with in regards to these matters is highly confidential, and we ask that you not
share it with any other parties (other than your legal advisors and management) without our prior
written consent.
GM and Amcast
The current pending disputes between Amcast, GM and Highland Capital are unrelated and do not
impose any risk with regard to the Proposal made by Highland Capital to Delphi. There is no
connection whatsoever between Highland Capitals involvement in Amcast and Highland Capitals
involvement in Delphi. Highland Capitals disputes with GM arose from a fact intensive situation
involving a commercial dispute between Amcast and GM. Following two unilateral price reductions by
GM, the board of directors of Amcast reached the conclusion that it could not continue to provide
product
to GM at a loss. Amcast made numerous attempts to negotiate fair pricing or other offsets without
success. As a result, Amcast was ultimately forced into liquidation.
Certain investment funds managed by Highland Capital became the largest shareholders in Amcast
when it emerged from chapter 11 on August 2, 2005, pursuant to a plan of reorganization confirmed
by the Ohio bankruptcy court. The plan of reorganization reduced Amcasts prepetition secured debt
from approximately $108 million to $54 million and, in return for this meaningful concession
provided by the bank group, funds managed by Highland Capital and other lenders received
one-hundred percent of the equity in a reorganized Amcast.
Highland Capital devoted substantial time and resources to providing guidance and advice to
Amcasts senior management team on such issues as fixing Amcasts remaining cost structure
deficiencies, as well as growing Amcasts business relationship with GM and other OEMs.
Unfortunately, Amcast never had a chance to regain profitability. Amcast experienced further
difficulty within only days of emerging from chapter 11 due to the fact that GM, despite having
assured Amcast that it could bid on future business upon emerging from chapter 11 and GM would
agree to certain price increases, immediately (i) sought price reductions that forced Amcast to
sell products below cost; (ii) insisted upon increased volumes with regard to unprofitable
programs; (iii) delayed the launch of a profitable program that was going to provide a big part of
Amcasts EBITDA for 2006 and 2007, as set forth in the disclosure statement filed with the Ohio
bankruptcy court; and (iv) told Amcast that GM would not be a good customer for Amcast and that
Amcast would not be able to bid on future business, prior to demanding that Amcast train the
foreign manufacturers that GM planned to use to replace Amcast because such manufacturers did not
have satisfactory quality runs. It was evident to Amcast that GM did not have any long term plans
for Amcast.
Amcast attended several face to face meetings with GM to discuss Amcasts cost structure, to
gain pricing concessions from GM on current programs and to discuss future business to sustain
Amcast. These meetings were unproductive. As a result, Amcast was forced to take drastic, but
commercially reasonable steps to liquidate on the most favorable terms possible for Amcast and its
stakeholders. Amcast had no choice but to file for chapter 11 again on December 1, 2005 in
Indianapolis, Indiana. As part of its rights as a debtor-in-possession, Amcast declined to ship
product to GM unless the pre-petition contract prices were increased to provide for a reasonable
profit to Amcast and its stakeholders. The Indiana bankruptcy court entered an order on December
21, 2005 in which it ordered GM to pay the increased prices through June 30, 2006. GM did not
appeal the order, but preserved its rights to seek a price reduction for any product shipped after
April 1, 2006.
GM never experienced an interruption in its supply chain as a result of Amcasts liquidation.
GM was able to transition its products to replacement suppliers without any interruption due in
large part to the cooperation provided by Amcast. Amcast even provided critical inventory banks for
parts that GM was not ready to transition to replacement suppliers by June 30, 2006. Despite this,
GM initiated, and continues to prosecute, what we believe is, unwarranted litigation against the
lenders (including Highland Capital) for: (i) recharacterization of the secured debt that was
specifically blessed and recognized by the Ohio bankruptcy court, (ii) equitable subordination, and
(iii) tortious interference with the purchase orders between GM and Amcast.
Highland Capital believes it acted appropriately in all respects with regard to Amcast and has
vigorously defended GMs claims thus far. Highland Capital also believes that none of the
Amcast-related matters will affect the consummation of the Proposal.
Motient
Highland Capital through certain of its affiliates and related entities (collectively, the
"Highland Parties) began acquiring Motients securities in 1998 prior to Motients emergence from
chapter 11. Eventually, these Highland Parties beneficially owned approximately 9,024,326 shares
of Motient common stock, representing approximately 14.3% of Motients issued and outstanding
common stock. In 2004, Motient began raising capital through the sale of securities pursuant to
various private placement transactions. After acquisition of these securities, the Highland
Parties questioned the appropriateness of certain actions regarding the last of these private
placement transactions being taken by the board of directors of Motient and raised concerns to the
board of directors of Motient. The Highland Parties believe that more than $70 million of value
was diverted from Motient to insiders and related entities. The Highland Parties believed that
litigation, and reporting these matters to the SEC, was the only way to drive certain individuals
and members of the board of directors away from Motient and to prevent further diversion of value
that was contemplated in a roll-up transaction.
After these concerns went unaddressed, Highland Legacy Limited, one of the Highland Parties,
commenced a derivate action against Motient and certain individuals and entities related to these
concerns. Additionally, certain Highland Parties commenced a lawsuit seeking a rescission of the
April 2005 private placement transaction through which they had purchased Motient securities.
Despite the lawsuits and the continued efforts of the Highland Parties and Mr. Dondero to highlight
actions that were inconsistent with the fiduciary duties owed by the board of directors and
management to Motient, including the duties of care, loyalty, utmost good faith and fair dealing,
the actions remained unrectified and the management continued to act in a manner that the Highland
Parties felt was detrimental to all of the stockholders of Motient. Following extensive efforts by
Highland Capital, Motient in late 2005 aborted its plans to pursue what Highland Capital believed
to be a conflicted transaction and in 2006 replaced the entire board of directors and management of
Motient in the face of a proxy contest led by Highland Capital.
The Highland Parties at all times acted in what they believed to be the best interests of
Motient and all of its stockholders. The Highland Parties and Highland Capital are committed to
maximizing their investors interest in every company in which Highland Capital or its affiliates
or related entities invest. Highland Capital does not feel that the Motient matter should in any
way impact your consideration of the Proposal. Again, the Proposal is reflective of Highland
Capitals desire to promote transactions which are in the best interests of all stakeholders.
Lawsuits Mentioned by Motient
Your counsel noted that Highland Capital appears to have been involved in numerous lawsuits.
As you know, Highland Capital is an SEC-registered investment adviser specializing in credit,
alternative investing and equity investments. Highland Capital currently manages approximately $35
billion (over 2000 individual investments) in leveraged loans, high yield bonds, structured
products, distressed assets, equity investments and other assets for banks, insurance companies,
pension plans, foundations, and endowments. The vast majority of these investments are in the form
of senior secured debt of U.S.-based companies. Over the years, many of the debt issuers in which
Highland Capital and its affiliates have invested have filed for bankruptcy and Highland Capital,
and its affiliates, like other similarly structured distressed investment managers, have simply
sought to protect their interests (and others who are similarly situated) through the U.S.
bankruptcy system and through court proceedings. This is common practice for like-minded distressed
managers and investors. Of the 53 suits noted in the past Motient correspondence, the vast
majority relate to bankruptcy-related proceedings arising from Highland Capitals normal distressed
investment-related activities. Highland Capital views these actions as evidence of its resolve to
maximize value for investors when faced with bankrupt issuers. The remaining
actions involved matters that Highland Capital believes arose in the ordinary course of its
business, including (i) personnel issues at Highland Capital, (ii) trading disputes with brokerage
firms and (iii) miscellaneous vendor disputes. Given our thirteen plus years of operation, our
over $35 billion in assets under management, Highland Capital views its involvement in these 53
lawsuits as inconsequential and unremarkable.
We believe the fact that Highland Capital is a party to various proceedings demonstrates its
commitment to its investors and the companies in which it invests, along with its desire to
maximize investment returns. These are all goals that are synonymous with what Delphi and its Board
of Directors are attempting to achieve for stockholders.
We are available at any time to meet with the Board or representatives of the Board regarding
this Commitment and look forward to the opportunity to address any additional questions or concerns
you might have.
|
|
|
|
|
|
Very truly yours,
HIGHLAND CAPITAL MANAGEMENT, L.P.
|
|
|
By: |
/s/ James D. Dondero
|
|
|
Name: |
James D. Dondero |
|
|
Title: |
President |
|
|
|
|
|
cc: |
|
Mr. Robert Steve Miller, Chairman
Mr. Rodney ONeal, President and Chief Executive Officer
Mr. John Sheehan, Chief Restructuring Officer |
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