Highland Capital seeks to block Delphi loan

SOURCE:

Reuters

2008-08-22 00:37:37

(Reuters) –

Highland Capital Management LP is trying to

prevent Delphi Corp (DPHIQ.PK) from borrowing an additional

$300 million from former parent General Motors Corp (GM.N),

court documents showed.

In court papers filed with the U.S. Bankruptcy Court in

Manhattan on Wednesday, Highland Capital said Delphi’s North

American operations “continue to lose staggering sums of money,

and drag down the rest of the business.”

Highland Capital, a Delphi bondholder, said recoveries for

unsecured creditors in the bankruptcy case were certain to be

eroded by the financing.

“The Debtors’ continued willingness to operate a

money-losing business that burns cash for the benefit of GM is

beyond comprehension,” Highland said in the court papers.

Delphi and Highland Capital could not be immediately

reached for comment.

Steven Cohen’s CR Intrinsic Investors LLC joined Highland

in the objection, according to the court documents.

Earlier this month, Delphi said General Motors had agreed

to increase its loan to Delphi by $300 million for a total of

$950 million to shore up the supplier’s liquidity.

Delphi, which filed for bankruptcy protection in October

2005, has cut thousands of jobs and divested several business

units in its reorganization.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by

Anshuman Daga)

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