Filed Pursuant to Rule 424(B)3

Registration Statement No.333-141117

 

PROSPECTUS SUPPLEMENT

(TO PROSPECTUS DATED MARCH 11, 2008)

 

 

Rights Offerings for

21,680,996 Shares of Common Stock at an exercise price of $59.61 per full share and

41,026,309 Shares of Common Stock at an exercise price of $38.39 per full share

 

This prospectus supplement relates to the offer and sale by us prior to our emergence from bankruptcy of up to a total of 62,707,305 shares of common stock of reorganized Delphi (Delphi, following its emergence from bankruptcy, is referred to herein as “reorganized Delphi”), issuable upon the exercise of subscription rights, as described in the accompanying prospectus.

 

New York Stock Exchange Listing

 

On March 20, 2008, the common stock of reorganized Delphi was approved for listing on the New York Stock Exchange, Inc., subject to official notice of issuance. As a result of such approval, the restrictions on transfer and exercise of discount rights by residents of Texas and the restrictions on transfer of discount rights to residents of Texas, as described in the accompanying prospectus, are no longer applicable. Residents of Texas may exercise or transfer discount rights, and holders of discount rights may transfer discount rights to residents of Texas, without providing to the rights agent the certifications described in the accompanying prospectus that the holder or the transferee, as applicable, is within one of specified categories of persons under Texas state securities laws. See, for example, page v of the accompanying prospectus under the headings “For Texas Residents Only” and “For All Holders of Discount Rights Who Desire to Transfer Discount Rights to a Resident of Texas.”

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

 

The date of this prospectus supplement is March 20, 2008.

PROSPECTUS

Rights Offerings for

21,680,996 Shares of Common Stock at an exercise price of $59.61 per full share and

41,026,309 Shares of Common Stock at an exercise price of $38.39 per full share

 

This prospectus relates to the offer and sale by us of up to a total of 62,707,305 shares of common stock of Delphi prior to its emergence from bankruptcy (Delphi, following its emergence from bankruptcy, is referred to as “reorganized Delphi”), issuable upon the exercise of subscription rights, as described below.

 

 

 

The “record date” is January 17, 2008, the date on which the confirmation hearing with respect to our plan of reorganization (as it may be amended, modified or supplemented from time to time, the “Plan”) commenced before the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”).

 

In addition to the basic subscription privilege described above, each discount right entitles an Eligible Holder who fully exercises its basic subscription privilege to subscribe, prior to the expiration date of the discount rights offering, for additional shares of common stock of reorganized Delphi at an exercise price of $38.64 per full share to the extent that any shares are not purchased by other Eligible Holders under their basic subscription privileges as of the expiration date of the discount rights offering. This is referred to as the “oversubscription privilege.” If an insufficient number of shares are available to fully satisfy oversubscription privilege requests, the available shares, if any, will be allocated pro rata among Eligible Holders who exercised their oversubscription privilege based upon the number of shares each oversubscribing Eligible Holder subscribed for under its basic subscription privilege. If there is a pro rata allocation of the remaining shares and an Eligible Holder receives an allocation of a greater number of shares than it subscribed for under its oversubscription privilege, then we will allocate to such Eligible Holder only the number of shares for which it subscribed under its oversubscription privilege, and we will allocate all remaining shares pro rata among all other Eligible Holders who exercised their oversubscription privileges on the same basis as described above. There is no oversubscription privilege in the par rights offering.

 

Although the discount rights offering and the par rights offering are being conducted concurrently, they are independent of one another. Therefore, to the extent you are eligible to receive and exercise discount rights and/or par rights, you may choose to exercise, as applicable, only discount rights, only par rights, both discount rights and par rights or no rights at all.

 

The rights expire at 5:00 p.m., New York City time, on March 31, 2008, unless the exercise period is extended. If you do not exercise your par rights or exercise or sell your discount rights, in each case, prior to their expiration, you will lose any value represented by those rights. You should carefully consider whether to exercise your par rights or exercise or sell your discount rights prior to the expiration of the applicable rights offering. If you decide to exercise any of your rights, you should carefully comply with the exercise procedures set forth in this prospectus. Additional information about the rights offerings may be found in this prospectus beginning on page 1 in the section entitled “Questions and Answers About the Rights Offerings.”

 

 

 

 

The rights offerings are being made to raise a portion of the funds necessary to consummate the Plan. If the Plan becomes effective, on the effective date of the Plan, all existing shares of our common stock, and any options, warrants, rights to purchase shares of our common stock or other equity securities (excluding the right to receive shares of common stock of reorganized Delphi as a result of the exercise of rights in the rights offerings) outstanding prior to the effective date of the Plan will be canceled, and on or shortly after the effective date of the Plan, reorganized Delphi will make the distributions provided for in the Plan, including issuing the shares of common stock of reorganized Delphi for which rights are exercised in the rights offerings.

 

 

 

 

During the discount rights offering and for the five trading days after the expiration date of the discount rights, this prospectus may also be used by each Investor (as defined below) (other than certain Investors, including Merrill (as defined below)), to offer and sell discount rights, common stock of reorganized Delphi issuable upon exercise of discount rights or common stock of reorganized Delphi issuable in connection with such Investor’s backstop of the discount rights offering from time to time, as determined by such selling Investor. Such investors may effect sales of discount rights, common stock of reorganized Delphi issuable upon exercise of discount rights and common stock of reorganized Delphi issuable in connection with such Investor’s backstop of the discount rights offering in the over-the-counter market or otherwise, at market prices, prices related to market prices or negotiated prices. In effecting these transactions, each of such selling Investors may realize profits or losses independent of the compensation referred to under “Plan of Distribution.” Each of such selling Investors may also make sales of discount rights, common stock of reorganized Delphi issuable upon exercise of discount rights or common stock of reorganized Delphi issuable in connection with such Investor’s backstop of the discount rights offering to dealers at prices which represent concessions from the prices at which discount rights or shares of common stock of reorganized Delphi are then trading in the market. The amount of these concessions, if any, will be determined from time to time by the particular selling Investor. Any discount rights or common stock so offered are offered subject to completion of the discount rights offering, to consummation of the Plan and issuance of the common stock by reorganized Delphi, and to such selling Investor’s right to reject orders in whole or in part.

 

Exercising the rights and investing in the common stock of reorganized Delphi involve risks. We urge you to carefully read the “Risk Factors” section beginning on page 35 of this prospectus and in our Annual Report on Form 10-K for the year ended December 31, 2007, and all other information included or incorporated by reference in this prospectus in its entirety, before you decide whether or not to exercise your rights.

 

 

 

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

 

 

 

The date of this prospectus is March 11, 2008.

 

On October 8, 2005, we and certain of our U.S. subsidiaries filed voluntary petitions for reorganization relief under chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”), and on October 14, 2005, three additional U.S. subsidiaries filed voluntary petitions for reorganization relief under chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The Bankruptcy Court is jointly administering these cases as “In re Delphi Corporation, et al., Case No. 05-44481 (RDD).” Our non-U.S. subsidiaries, which were not included in the filings, continue their business operations without supervision from the Bankruptcy Court, and are not subject to the requirements of the Bankruptcy Code.

 

On August 3, 2007, we executed an Equity Purchase and Commitment Agreement (as amended as of December 10, 2007, and as it may be further amended, modified or supplemented from time to time, the “EPCA”) with A-D Acquisition Holdings LLC (“ADAH”), which is an affiliate of Appaloosa Management, L.P. (“Appaloosa”), Harbinger Del-Auto Investment Company, Ltd., which is an affiliate of Harbinger Capital Partners Master Fund I, L.P. (“Del-Auto”), Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill”), UBS Securities LLC (“UBS”), Goldman, Sachs & Co. (“Goldman”), and Pardus DPH Holding LLC, which is an affiliate of Pardus Special Opportunities Master Fund L.P. (“Pardus”), pursuant to which, and on the terms and subject to the conditions set forth in the EPCA, which are more fully described under “Certain Relationships and Related Transactions — Equity Purchase and Commitment Agreement,” ADAH, Del-Auto, Merrill, UBS, Goldman and Pardus (collectively, the “Investors”) would invest, assuming the full backstop commitment of the discount rights offering described below, $2.55 billion in reorganized Delphi.

 

On September 6, 2007, we filed with the Bankruptcy Court our disclosure statement (as it may be amended, modified or supplemented from time to time, the “Disclosure Statement”) and the Plan. After a hearing on December 6 and 7, 2007, the Bankruptcy Court entered an order approving our first amended Disclosure Statement, which was filed with the Plan on December 10, 2007. The Plan provides for certain recoveries to our creditors and shareholders, including the rights offerings discussed herein.

 

On January 25, 2008, the Plan, as amended as of that date, was confirmed by the Bankruptcy Court. We will not emerge from bankruptcy unless and until the Plan becomes effective. The rights offerings currently are scheduled to expire prior to the effective date of the Plan. We cannot assure you that the terms of the Plan will not change due to market conditions, the Bankruptcy Court’s requirements, or otherwise after the expiration of either or both of the rights offerings. You will have the right to withdraw your exercise of par rights or discount rights until the withdrawal deadline for the applicable rights offering. You will have no right to withdraw your exercise of par rights or discount rights after the withdrawal deadline for the applicable rights offering, except as set forth in the following sentence. We intend to provide you with the right to withdraw your previous exercise of rights after the applicable withdrawal deadline only if there are changes to the Plan after the withdrawal deadline that the Bankruptcy Court determines are materially adverse to the holders of the par rights or the discount rights, as the case may be, and the Bankruptcy Court requires resolicitation of votes under section 1126 of the Bankruptcy Code or an opportunity to change previously cast acceptances or rejections of the Plan. If you withdraw your exercise of rights under such circumstances and in accordance with the withdrawal procedures described in this prospectus, we will return to you your exercise payments with respect to any rights so withdrawn, without interest. If (1) we provide rights holders with the aforementioned withdrawal rights and (2) either (a) we and the Investors have not entered into an amendment to the EPCA providing that the Investors’ backstop commitment applies to any discount rights that are so withdrawn, or (b) we have not otherwise established funding for the Plan, then we may terminate the rights offerings, and, under such circumstances, the Plan that includes the rights offerings described in this prospectus may not become effective. If you so withdraw your rights, we will return to you your exercise payments, without interest. We can give no assurance, however, that if we grant withdrawal rights to holders that we and the Investors will enter into an amendment to the EPCA or that we will otherwise establish funding for the Plan as described above. In addition, if the EPCA otherwise terminates after the expiration date, then we may terminate the rights offerings, the Plan that includes the rights offerings described in this prospectus may not become effective, and, if we terminate the rights offerings, we will return to you your exercise payments, without interest. If we terminate the rights offerings before the rights expire, we expect that the rights agent will return to you your exercise payments, without interest, within ten business days from the termination of the rights offerings. In the event the rights offerings expire but we and Investors extend the deadline for effectiveness of the Plan, we may retain your exercise payments for an indefinite period of time.

 

Even if rights are exercised in the rights offerings, we will not issue shares of common stock of reorganized Delphi for which those rights are exercised unless and until the Plan becomes effective.

Effectiveness of the Plan is subject to a number of conditions, including the completion of the transactions contemplated by the EPCA (which includes the Investors’ backstop of the discount rights offering), the entry of certain orders by the Bankruptcy Court and the obtaining of necessary exit financing. We are currently seeking $6.1 billion of exit financing, an amount that is consistent with the confirmation order of the Plan. See “Description of Proposed Exit Financing.” The transactions contemplated by the EPCA also are subject to a number of conditions which are more fully described under “Certain Relationships and Related Transactions — Equity Purchase and Commitment Agreement.” There can be no assurances that such exit financing will be obtained (or, if obtained, the terms thereof) or such other conditions will be satisfied, and we cannot assure you that the Plan will become effective on the terms described in this prospectus or at all.

 

Pursuant to the Plan, on or as soon as practicable after the effective date of the Plan, there will be outstanding up to 160,124,155 shares of common stock of reorganized Delphi. The 160,124,155 share figure assumes (1) conversion of up to 35,381,155 shares of Convertible Preferred Stock (as defined under “Description of Capital Stock — Preferred Stock”) (which are convertible at any time into shares of common stock of reorganized Delphi, initially on a one-for-one basis) that may be issued under the Plan (assuming the issuance of 16,508,176 shares of Series C Convertible Preferred Stock to General Motors (“GM”) under the Plan), (2)  no exercise of par rights and exercise in full of discount rights (or the Investors’ backstop commitment of the discount rights offering), and (3) exercise in full of the six-month warrants, seven-year warrants and ten-year warrants (collectively, the “Warrants”) to be issued pursuant to the Plan, which initially will be exercisable to purchase up to a total of 25,113,275 shares of common stock of reorganized Delphi. The 160,124,155 share figure also assumes that 17,237,418 shares of common stock of reorganized Delphi are issued to creditors in respect of their “Trade and Other Unsecured Claims” (as defined in the Plan) in an aggregate amount of approximately $1.31 billion, which number of shares is subject to upward or downward adjustment depending on the value of those claims and is further estimated based on our assumptions regarding, among other things, allowed accrued post-petition interest. Assumptions made with respect to the exercise of rights and warrants and the conversion of convertible securities for the purposes of this paragraph differ from the assumptions set forth under “Unaudited Pro Forma Condensed Consolidated Financial Information.” See “Use of Proceeds” and “Capitalization.”

 

We will receive gross proceeds of up to approximately $2.9 billion from the rights offerings (assuming that all par rights are exercised) before deducting fees, including the Investors’ backstop commitment fee, and expenses related to the rights offerings. We will receive gross proceeds of up to approximately $1.6 billion from the sale of shares of common stock of reorganized Delphi in connection with the discount rights offering (before deducting fees, including the Investors’ backstop commitment fee, and expenses related to the discount rights offering), regardless of the number of discount rights exercised, as a result of the backstop commitment of the Investors described below. The net proceeds from the discount rights offering will be used to make payments and distributions contemplated by the Plan and for general corporate purposes. If any shares of common stock of reorganized Delphi are purchased pursuant to the exercise of the oversubscription privilege in the discount rights offering, we will receive additional gross proceeds of $0.25 per share of common stock purchased pursuant to the oversubscription privilege, which additional proceeds will be distributed pro rata to Eligible Holders that did not exercise or transfer any of their discount rights in the discount rights offering based on the ultimate allowed amount of each such holder’s Eligible Claim.

 

We will receive gross proceeds of up to approximately $1.3 billion from the sale of shares of common stock of reorganized Delphi in connection with the par rights offering (assuming that all par rights are exercised) before deducting fees and expenses related to the par rights offering. The net proceeds from the par rights offering will be used to satisfy certain liquidity requirements, to satisfy certain claims of our unions, to reduce the amount of preferred stock distributed to GM and to partially satisfy certain claims of certain unsecured creditors as described under “Use of Proceeds.” If fewer than all of the par rights are exercised in the par rights offering, the shares of common stock of reorganized Delphi offered in the par rights offering that are not purchased pursuant to the exercise of par rights will be distributed to certain of our creditors in partial satisfaction of certain of their claims (or, in the case of GM, as shares of Series C Convertible Preferred Stock issued to GM under the Plan).

 

We intend to use the net proceeds from the rights offerings and the $975 million from the additional equity investments in reorganized Delphi by the Investors as described below, together with borrowings under our exit financing, to the extent obtained, if at all, to make payments and distributions contemplated by the Plan and for general corporate purposes. See “Use of Proceeds.”

 

The Investors have agreed to backstop the discount rights offering, on the terms and subject to the conditions of the EPCA, by purchasing from us, on the effective date of the Plan for the $38.39 in cash per full share basic subscription privilege exercise price, any shares of common stock of reorganized Delphi being offered in the discount rights offering that are not purchased pursuant to the exercise of discount rights. The backstop commitment of the Investors does not apply to the par rights offering. In addition, on the terms and subject to the conditions of the EPCA, the Investors have agreed to make additional equity investments in reorganized Delphi by purchasing $800 million of Senior Convertible Preferred Stock (as defined under “Description of Capital Stock — Preferred Stock”) and an additional $175 million of common stock of reorganized Delphi for $38.39 in cash per share on the effective date of the Plan, for total equity investments in reorganized Delphi, assuming the full backstop commitment, of $2.55 billion. The Investors’ backstop commitment and commitment to make the additional equity investments are subject to the satisfaction of the conditions set forth in the EPCA, as described under “Certain Relationships and Related Transactions — Equity Purchase and Commitment Agreement.” We have paid the Investors aggregate fees of $63 million for their equity commitments and arrangement services, of which approximately $39 million relates to the backstop commitment of the discount rights offering and $18 million relates to the commitment to purchase the additional $175 million of common stock of reorganized Delphi. As of March 10, 2008, based on their most recently filed Schedules 13D or Form 4, as the case may be, the Investors and their affiliates beneficially owned a total of 125,739,448 shares, or 22.3%, of our outstanding common stock.

 

Pursuant to the Plan, Appaloosa has agreed not to participate in the par rights offering, and par rights that would otherwise have been distributed to Appaloosa will be instead distributed to the other holders of record of our common stock as of the record date for the rights offerings.

 

On the effective date of the Plan, following the cancellation of all existing shares of our common stock and all of our other existing equity securities outstanding prior to the effective date of the Plan and following the funding of the Investors’ equity commitments, each of ADAH, Del-Auto, Merrill, UBS, Goldman and Pardus and their respective affiliates would beneficially own¹ either (1) assuming the original rights holders exercise all of their rights in the rights offerings and each Investor purchases no shares of common stock pursuant to its backstop commitment in the discount rights offering, a total of 14,438,623, 5,031,776, 1,607,481, 1,612,167, 3,452,693 and 8,041,408 shares, respectively, or 10.7%, 3.7%, 1.2%, 1.2%, 2.6% and 6.0%, respectively, of the outstanding common stock of reorganized Delphi, or (2) assuming rights holders (other than the Plan Investors and their affiliates) exercise no rights in the rights offerings and each Investor purchases the full amount of its backstop commitment in the discount rights offering, a total of 16,829,014, 10,150,735, 2,013,967, 2,018,653, 10,894,441 and 12,835,849 shares, respectively, or 12.5%, 7.5%, 1.5%, 1.5%, 8.1%, 9.5%, respectively, of the outstanding common stock of reorganized Delphi, in each case assuming (i) conversion of all of the Investors’ shares of Senior Convertible Preferred Stock and taking into account shares of common stock of reorganized Delphi received by certain Investors and their affiliates in their capacity as stockholders and creditors of Delphi pursuant to the Plan (assuming the exercise in full by the Investors of their basic subscription privileges in the discount rights offering), (ii) no exercise of par rights, (iii) no exercise of Warrants, (iv) 17,237,418 shares of common stock of reorganized Delphi are issued to creditors in respect of their Trade and Other Unsecured Claims in an aggregate amount of approximately $1.31 billion and (v) 16,508,176 shares of Series C Convertible Preferred Stock are issued to GM (and are converted into shares of common stock of reorganized Delphi, initially on a one-for-one basis). References to the number of shares and percentage ownership are further estimated based on our assumptions regarding, among other things, allowed accrued post-petition interest. The Investors are not obligated to backstop the discount rights offering unless certain conditions are satisfied under the EPCA. Assumptions made with respect to the exercise of rights and warrants and the conversion of convertible securities for the purposes of this paragraph differ from the assumptions used elsewhere in this prospectus in stating the maximum number of shares of reorganized Delphi common stock outstanding on, or as promptly as practicable after, the effective date of the Plan and from those set forth under “Unaudited Pro Forma Condensed Consolidated

 

 

¹ The projected percentage ownership of each of the Investors and their affiliates does not reflect all of the shares to be received by certain affiliates of the Investors as a result of claims such affiliates may beneficially own or discount rights such affiliates may exercise. Because of the EPCA, the Investors have separately filed Schedule 13Ds which state that they may be deemed to beneficially own the shares of our common stock beneficially owned by the other Investors. However, we have been advised by the Investors that following our emergence from bankruptcy, they believe that each Investor will no longer be deemed to beneficially own any shares of common stock held by another Investor. Except where specifically stated otherwise, each Investor’s projected ownership percentage is being reported separately in this prospectus.

Financial Information.” The Investors have the ability under the EPCA, prior to the date that the registration statement of which this prospectus forms a part is declared effective under the Securities Act, to arrange for a limited number of additional investors to whom the Investors may sell, in accordance with the EPCA and applicable securities laws, any shares of common stock of reorganized Delphi that they purchase pursuant to the Plan and the EPCA. Some of the Investors have informed us that they have arranged or intend to arrange for such sales to additional investors. The amount and percentage of shares to be owned by the Investors gives effect to the expected sale of shares of common stock of reorganized Delphi to such additional investors. For the number of shares that each Investor has informed us that it expects to sell to such additional investors, see “Effects of the Rights Offering on the Investors’ and GM’s Ownership.” Such sales to additional investors may be made by the Investors directly to such additional investors, or may be made by Delphi directly to such additional investors, and may substantially decrease the Investors’ ownership percentage in reorganized Delphi. The additional investors will have the rights of the Investors from whom they purchase common stock of reorganized Delphi under the registration rights agreement described below. See “Use of Proceeds,” “Capitalization,” “Effects of the Rights Offerings on the Investors’ Ownership” and “Certain Relationships and Related Transactions — Registration Rights Agreement.”

 

The ownership percentages and number of outstanding shares of reorganized Delphi common stock set forth in this prospectus assume that 16,508,176 shares of Series C Convertible Preferred Stock are issued to GM under the Plan. However, to the extent that any par rights are exercised in the par rights offering, the gross proceeds generated from the exercise of par rights will be distributed in the order described under “Use of Proceeds” and, to the extent that GM receives a cash distribution from such proceeds, the number of shares of Series C Convertible Preferred Stock that would be issued to GM will be reduced by one share for each $59.61 of such cash distribution. In addition, pursuant to the terms of the Series C Convertible Preferred Stock, we are required to redeem up to $1 billion of outstanding shares of Series C Convertible Preferred Stock at an initial redemption price of $65.00 per share to the extent of any proceeds we receive from exercise of the six-month warrants.

 

Additional information about the rights offerings may be found in this prospectus beginning on page 1 in the section entitled “Questions and Answers About the Rights Offerings.”

 

We intend to apply to list the common stock of reorganized Delphi on the New York Stock Exchange or, if approved by ADAH, the Nasdaq Global Select Market, if and when we meet the respective listing requirements. There can be no assurances, however, that we will meet the respective listing requirements on the effective date of the Plan or at any time thereafter. Therefore, the shares of common stock of reorganized Delphi may not be listed or quoted on the New York Stock Exchange, the Nasdaq Global Select Market or any other securities exchange or quotation system at the time they are issued on the effective date of the Plan. Although we have an obligation under the EPCA to use our commercially reasonable efforts to list the shares of common stock of reorganized Delphi on the New York Stock Exchange or, if approved by ADAH, the Nasdaq Global Select Market, we cannot assure you that the common stock of reorganized Delphi will ever be listed on the New York Stock Exchange, the Nasdaq Global Select Market or any other securities exchange or quotation system. The rights will not be listed on any securities exchange or quoted on any automated quotation system. Our common stock currently is quoted on the Pink Sheets LLC (the “Pink Sheets”) under the symbol “DPHIQ.” The last reported sale price of our common stock on the Pink Sheets on March 7, 2008, was $0.16 per share.

TABLE OF CONTENTS

 

In this prospectus, “Delphi,” the “company,” “we,” “us” and “our” refer to Delphi Corporation, a Delaware corporation. We sometimes in this prospectus refer to Delphi, with respect to dates on and after the effective date of the Plan, as “reorganized Delphi,” and, accordingly, the foregoing terms, when used as of and after the effective date of the Plan, refer to reorganized Delphi.

 

The descriptions and disclosure in this prospectus with respect to reorganized Delphi assume that the Plan becomes effective on the terms confirmed by the Bankruptcy Court. The effectiveness of the Plan is not scheduled to occur until after the expiration of the rights offerings. We cannot assure you that the terms of the Plan will not change due to market conditions, the Bankruptcy Court’s requirements, or otherwise after the expiration of either or both of the rights offerings. Moreover, the effectiveness of the Plan is subject to a number of conditions, including the completion of the transactions contemplated by the EPCA, the entry of certain orders by the Bankruptcy Court and the obtaining of necessary exit financing. We are currently seeking $6.1 billion of exit financing, an amount that is consistent with the confirmation order of the Plan. There can be no assurances that such exit financing will be obtained (or, if obtained, the terms thereof) or such other conditions will be satisfied, and we cannot assure you that the Plan will become effective on the terms described in this prospectus or at all.

 

References in this prospectus to our capital stock, when used with respect to dates on and after the effective date of the Plan, refer to the capital stock of reorganized Delphi. On the effective date of the Plan, all existing shares of our common stock, and any options, warrants, rights to purchase shares of our common stock or other equity securities (excluding the right to receive shares of common stock of reorganized Delphi as a result of the exercise of rights in the rights offerings) outstanding prior to the effective date of the Plan will be canceled.

 

We are distributing the rights and offering the underlying shares of common stock of reorganized Delphi directly to you. We have not employed any brokers, dealers or underwriters in connection with the solicitation or exercise of rights in the rights offerings, and no commissions, fees or discounts will be paid in connection with the rights offerings. Computershare Trust Company, N.A. is acting as rights agent for the rights offerings, and Georgeson Inc. is acting as information agent for the rights offerings. Although some of our directors, officers and other employees may solicit responses from you, those directors, officers and other employees will not receive any commissions or compensation for their services other than their normal compensation.

 

As permitted under the rules of the Securities and Exchange Commission (the “SEC”), this prospectus incorporates important business information about us that is contained in documents that we file with the SEC but that are not included in or delivered with this prospectus. You may obtain copies of these documents, without charge, from the website maintained by the SEC at www.sec.gov, as well as from Delphi. See “Incorporation By Reference” and “Where You Can Find More Information.”

 

You should rely only on the information contained or incorporated by reference in this prospectus or any supplement to this prospectus. We have not authorized anyone to provide you with different information. These securities are not being offered in any state where the offer is not permitted. You should not assume that the information in this prospectus is accurate as of any date other than the date on the front of this prospectus, and you should assume that any information incorporated by reference is accurate only as of the date of the document incorporated by reference, regardless of the time of delivery of this prospectus or of any sale of the common stock of reorganized Delphi.

 

The SEC allows us to “incorporate by reference” the information that we file with it, which means that we can disclose important information to you by referring you to those documents already on file. The information incorporated by reference is an important part of this prospectus. We incorporate by reference the documents listed below:

 

 

 

Notwithstanding the foregoing, information furnished under Items 2.02 and 7.01 of any Current Report on Form 8-K, including the related exhibits under Item 9.01, is not incorporated by reference in this prospectus.

 

We will provide to each person, including any beneficial owner of our common stock or other securities, to whom a prospectus is delivered, a copy of any or all of the reports or documents that have been incorporated by reference in this prospectus but not delivered with this prospectus. You may request a copy of these reports or documents at no cost, by writing or telephoning us at:

 

Delphi Corporation

5725 Delphi Drive

Troy, Michigan 48098

Telephone: (248) 813-2000

Attention: Investor Relations

 

These reports and documents also may be accessed through our Internet website at www.delphi.com. Our website, and the information contained in, accessible from or connected to our website, shall not be deemed to be incorporated into, or otherwise constitute a part of, this prospectus.

 

We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document that we file with the SEC at the Public Reference Room of the SEC at 100 F Street N.E., Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet website at www.sec.gov that contains reports, proxy statements and other information that we file electronically with the SEC.

 

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the Warrants, the shares underlying the Warrants, the rights offerings and the shares underlying the rights. This prospectus does not contain all of the information set forth in the registration statement and its exhibits. Statements made by us in this prospectus as to the contents of any contract, agreement or other document referred to in this prospectus are not necessarily complete. For a more complete description of these contracts, agreements and other documents, you should carefully read the exhibits to the registration statement and the documents that we refer to above under the caption “Incorporation by Reference.”

 

None of the Plan, the Disclosure Statement, any other filings by Delphi with the Bankruptcy Court, nor any Schedule 13D or amendment thereto or any other filing by any Investor shall be deemed to be incorporated into, or otherwise constitute a part of, this prospectus.

 

FOR RESIDENTS OF INDIANA, OHIO, PENNSYLVANIA, UTAH AND TEXAS ONLY

 

WE HAVE ENGAGED GEORGESON SECURITIES CORPORATION TO ASSIST US IN THE DISCOUNT RIGHTS OFFERING AND THE PAR RIGHTS OFFERING AS AN ACCOMMODATING BROKER IN INDIANA, OHIO, PENNSYLVANIA AND UTAH, AND IN THE DISCOUNT RIGHTS OFFERING AS AN ACCOMMODATING BROKER IN TEXAS TO PERSONS WHO ARE ENTITLED TO EXERCISE DISCOUNT RIGHTS IN TEXAS. SEE “FOR TEXAS RESIDENTS ONLY” BELOW. IN SUCH STATES, APPLICABLE STATE SECURITIES LAWS REQUIRE SUCH OFFERINGS TO BE MADE BY A REGISTERED BROKER-DEALER.

 

GEORGESON SECURITIES CORPORATION IS A REGISTERED BROKER-DEALER IN ALL FIFTY STATES. GEORGESON SECURITIES CORPORATION IS NOT UNDERWRITING THE RIGHTS OFFERINGS, HAS NO OBLIGATION TO PURCHASE ANY RIGHTS OR SHARES OF COMMON STOCK OF REORGANIZED DELPHI AND IS NOT OBLIGATED TO FIND OR QUALIFY ANY PURCHASERS OF THE RIGHTS OR THE SHARES OF COMMON STOCK OF REORGANIZED DELPHI. GEORGESON SECURITIES CORPORATION HAS NOT PREPARED A REPORT OR OPINION CONSTITUTING RECOMMENDATIONS OR ADVICE TO US IN CONNECTION WITH EITHER OF THE RIGHTS OFFERINGS. IN ADDITION, GEORGESON SECURITIES CORPORATION HAS

EXPRESSED NO OPINION AS TO THE FAIRNESS OF THE EXERCISE PRICE, THE TERMS OR STRUCTURE OF THE RIGHTS OFFERINGS OR THE PRICES AT WHICH THE COMMON STOCK OF REORGANIZED DELPHI MAY TRADE AFTER ISSUANCE. GEORGESON SECURITIES CORPORATION DOES NOT MAKE ANY RECOMMENDATIONS AS TO WHETHER ANY RIGHTS HOLDER SHOULD EXERCISE OR TRANSFER ITS RIGHTS.

 

FOR TEXAS RESIDENTS ONLY

 

WE HAVE RECEIVED QUALIFICATION OF THE RIGHTS OFFERINGS FROM ALL REQUIRED STATE SECURITIES COMMISSIONS, EXCEPT WITH RESPECT TO THE DISCOUNT RIGHTS OFFERING IN TEXAS. AS A RESULT, IF YOU ARE A RESIDENT OF, OR HAVE YOUR PRINCIPAL PLACE OF BUSINESS IN, TEXAS, YOU WILL BE ENTITLED TO EXERCISE OR TRANSFER DISCOUNT RIGHTS ONLY IF YOU CERTIFY TO THE RIGHTS AGENT THAT YOU ARE ONE OF THE FOLLOWING:

 

(I) AN EXISTING SECURITY HOLDER OF DELPHI,

 

(II) AN “ACCREDITED INVESTOR” (AS DEFINED IN RULE 501(a)(1)-(4), (7) AND (8) UNDER THE SECURITIES ACT), EXCLUDING ANY SELF-DIRECTED EMPLOYEE BENEFIT PLAN WITH INVESTMENT DECISIONS MADE SOLELY BY PERSONS THAT ARE “ACCREDITED INVESTORS” (AS DEFINED IN RULE 501(a)(5)-(6) UNDER THE SECURITIES ACT),

 

(III) A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT),

 

(IV) A CORPORATION, PARTNERSHIP, TRUST, ESTATE OR OTHER ENTITY (EXCLUDING INDIVIDUALS) HAVING A NET WORTH OF NOT LESS THAN $5 MILLION OR A WHOLLY OWNED SUBSIDIARY OF SUCH ENTITY, AS LONG AS THE ENTITY WAS NOT FORMED FOR THE PURPOSE OF ACQUIRING THE RIGHTS AND THE UNDERLYING SHARES OF COMMON STOCK OF REORGANIZED DELPHI, OR

 

(V) ANOTHER EXEMPT PERSON UNDER THE TEXAS STATE SECURITIES LAWS.

 

WE AND THE RIGHTS AGENT, AS APPLICABLE, HAVE THE DISCRETION TO DELAY OR TO REFUSE TO DISTRIBUTE ANY SHARES YOU MAY ELECT TO PURCHASE THROUGH THE EXERCISE OF DISCOUNT RIGHTS IF WE DEEM IT NECESSARY TO COMPLY WITH TEXAS STATE SECURITIES OR BLUE SKY LAWS.

 

FOR ALL HOLDERS OF DISCOUNT RIGHTS
WHO DESIRE TO TRANSFER DISCOUNT RIGHTS TO A RESIDENT OF TEXAS

 

A HOLDER OF DISCOUNT RIGHTS MAY TRANSFER DISCOUNT RIGHTS TO A PERSON OR ENTITY THAT IS A RESIDENT OF, OR HAS ITS PRINCIPAL PLACE OF BUSINESS IN, TEXAS ONLY IF THE TRANSFEROR OR THE TRANSFEREE CERTIFIES TO THE RIGHTS AGENT THAT THE TRANSFEREE IS ONE OF THE SPECIFIED PERSONS LISTED IN CLAUSES (I) THROUGH (V) ABOVE UNDER “FOR TEXAS RESIDENTS ONLY.”

 

WE AND THE RIGHTS AGENT, AS APPLICABLE, HAVE THE DISCRETION TO DELAY OR TO REFUSE TO EFFECT ANY TRANSFER OF DISCOUNT RIGHTS IF WE DEEM IT NECESSARY TO COMPLY WITH TEXAS STATE SECURITIES OR BLUE SKY LAWS.

 

The following are examples of what we anticipate will be common questions about the rights offerings. The answers are based on selected information from this prospectus and the documents incorporated by reference herein. The following questions and answers do not contain all of the information that is important to you and may not address all of the questions that you may have about the rights offerings. This prospectus and the documents incorporated by reference herein contain more detailed descriptions of the terms and conditions of the rights offerings and provides additional information about us and our business, including potential risks related to the rights offering, the common stock of reorganized Delphi, our reorganization and our business.

 

Exercising the rights and investing in the common stock of reorganized Delphi involves risks. We urge you to carefully read the “Risk Factors” sections beginning on page 35 of this prospectus and in our Annual Report on Form 10-K for the year ended December 31, 2007, and all other information included or incorporated by reference in this prospectus in its entirety, before you decide whether or not to exercise rights.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By Mail:		By Overnight Courier:		By Hand:
Computershare Trust Company, N.A. Attn: Corporate Actions P.O. Box 859208 Braintree, MA 02185-9208		Computershare Trust Company, N.A. Attn: Corporate Actions 161 Bay State Drive Braintree, MA 02184		Computershare Trust Company, N.A. Attn: Corporate Actions 161 Bay State Drive Braintree, MA 02184
Telephone Number For Confirmation: (800) 499-7619

 

 

 

 

 

 

 

(i)		an existing security holder of Delphi,
(ii)		an “accredited investor” (as defined in Rule 501(a)(1)-(4), (7) and (8) under the Securities Act), excluding any self-directed employee benefit plan with investment decisions made solely by persons that are “accredited investors” (as defined in Rule 501(a)(5)-(6) under the Securities Act),
(iii)		a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act),
(iv)		a corporation, partnership, trust, estate or other entity (excluding individuals) having a net worth of not less than $5 million or a wholly owned subsidiary of such entity, as long as the entity was not formed for the purpose of acquiring the rights and the underlying shares of common stock of reorganized Delphi, or
(v)		another exempt person under the Texas state securities laws.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The discount rights are transferable until 5:00 p.m., New York City time, on the business day prior to the expiration date of the discount rights offering. Unless the discount rights offering is extended, the deadline for transfer will be 5:00 p.m., New York City time, on March 28, 2008. See “The Rights Offerings — Transferability of Rights and Listing.”

 

However, any transfer of discount rights must be made sufficiently in advance of the expiration date to comply with settlement procedures applicable to sales of securities. Although we can give no assurance that there will be any trading market for the discount rights, if trading in the discount rights is initiated, we expect that such trading will be on a customary basis in accordance with normal settlement procedures, and that trades effected in discount rights will be required to be settled within three trading days after the trade date. A purchase and sale of discount rights that is effected on the date that is two days prior to the expiration date of the discount rights offering would be required to be settled not later than the time the discount rights will have expired. Therefore, if discount rights are purchased on or after the date that is two business days prior to the expiration date of the discount rights offering, such discount rights may be received after they have already expired and will be of no value.

 

If you desire to transfer discount rights to a person or entity that is a resident of, or has its principal place of business in, Texas, as a condition to that transfer, you or the proposed transferee must certify to the rights agent that the proposed transferee is within one of the following specified categories of persons:

 

 

 

 

 

 

 

In addition, if you are a resident of, or have your principal place of business in, Texas, you will be entitled to transfer discount rights only if you certify to the rights agent that you are within one of specified categories of persons under Texas state securities laws. If you are a resident of, or have your principal place of business in, Texas, you should have received a form of certification as part of your rights certificate or the other materials accompanying the mailing of this prospectus. Accordingly, if you are a resident of, or have your principal place of business in, Texas and you desire to transfer discount rights, please complete this certification and return it to the rights agent with your rights certificate. See “For Texas Residents Only” on page v of this prospectus and “Other than complying with the exercise procedures described above and paying the exercise price, are there any other conditions to my exercise of rights?” above.

 

We and the rights agent, as applicable, have the discretion to delay or to refuse to effect any transfer of discount rights if we deem it necessary to comply with Texas state securities or blue sky laws.

 

 

 

 

 

 

 

 

 

 

 

 

The 160,124,155 share figure assumes that the aggregate amount of all Trade and Other Unsecured Claims (as defined in the Plan) that are allowed or estimated for distribution purposes by the Bankruptcy Court total approximately $1.31 billion and are satisfied with 17,237,418 shares of common stock of reorganized Delphi and is further estimated based on our assumptions regarding, among other things, allowed accrued post-petition interest. Assumptions made with respect to the exercise of rights and warrants and the

conversion of convertible securities for the purposes of this paragraph differ from the assumptions used elsewhere in this prospectus in stating the maximum number of shares of reorganized Delphi common stock outstanding on, or as promptly as practicable after, the effective date of the Plan and from those set forth under “Unaudited Pro Forma Condensed Consolidated Financial Information.’’

 

The ownership percentages and number of outstanding shares of reorganized Delphi common stock set forth in this prospectus also assume that 16,508,176 shares of Series C Convertible Preferred Stock are issued to GM under the Plan. However, to the extent that any par rights are exercised in the par rights offering, the gross proceeds generated from the exercise of par rights will be distributed in the order described under “Use of Proceeds” and, to the extent that GM receives a cash distribution from such proceeds, the number of shares of Series C Convertible Preferred Stock that would be issued to GM will be reduced by one share for each $59.61 of such cash distribution.

 

In addition, we will have available for issuance to our employees under the Delphi Corporation 2007 Long-Term Incentive Plan a number of shares of common stock of reorganized Delphi equal to 8% of the number of the fully diluted shares of common stock of reorganized Delphi outstanding immediately following consummation of the Plan and the transactions contemplated thereby. Any such issuance of shares to our employees will dilute your ownership interest in us.

 

 

 

We intend to provide you with the right to withdraw your previous exercise of rights after the applicable withdrawal deadline only if there are changes to the Plan after the applicable withdrawal deadline that the Bankruptcy Court determines are materially adverse to the holders of the par rights or the discount rights, as the case may be, and the Bankruptcy Court requires resolicitation of votes under section 1126 of the Bankruptcy Code or an opportunity to change previously cast acceptances or rejections of the Plan. If you withdraw your exercise of rights under such circumstances and in accordance with the withdrawal procedures described in this prospectus, we will return to you your exercise payments with respect to any rights so withdrawn, without interest. If (1) we provide rights holders with withdrawal rights and (2) either (a) we and the Investors have not entered into an amendment to the EPCA providing that the Investors’ backstop commitment applies to any discount rights that are so withdrawn, or (b) we have not otherwise established funding for the Plan, then we may terminate the rights offerings and, under such circumstances, the Plan that includes the rights offerings described in this prospectus may not become effective, and, if you so withdraw your rights and we terminate the rights offerings, we will return to you your exercise payments, without interest. We can give no assurance, however, that if we grant withdrawal rights to holders that we and the Investors will enter into an amendment to the EPCA or that we will otherwise establish funding for the Plan as described above. In addition, if the EPCA otherwise terminates after the expiration date, then we may terminate the rights offerings, the Plan that includes the rights offerings described in this prospectus may not become effective, and, if we terminate the rights offerings, we will return to you your exercise payments, without interest.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In addition, the obligations of both the Investors and us under the EPCA are subject to the following additional conditions: (1) the rights offerings described in this prospectus must have occurred (although

there is no requirement that a particular amount of rights be exercised); and (2) we must have received the proceeds of our exit financing which, together with the equity investments by the Investors and the gross proceeds from the rights offerings, are sufficient to fully fund the Plan (to the extent we are to fund such transactions as contemplated by the Plan). We currently estimate that approximately $6.1 billion of exit financing will be necessary to satisfy these conditions.

 

 

 

 

 

Any Investor other than ADAH may terminate the EPCA, as to itself, at any time on or after June 30, 2008 if the closing of the transactions contemplated pursuant to the EPCA has not occurred on or before such date.

 

 

additional investors will have the rights of the Investors from whom they purchase common stock of Reorganized Delphi under the registration rights agreement. See “Certain Relationships and Related Transactions — Registration Rights Agreement.” The Investors are not obligated to backstop the discount rights offering unless certain conditions are satisfied under the EPCA.

 

 

 

 

 

The backstop commitment of the Investors does not apply to the par rights offering. If fewer than all of the par rights are exercised in the par rights offering, the shares of common stock of reorganized Delphi offered in the par rights offering that are not purchased pursuant to the exercise of par rights will be issued to certain of our creditors in partial satisfaction of certain of their claims (or, in the case of GM, as shares of Series C Convertible Preferred Stock issued to GM under the Plan). Pursuant to the Plan, Appaloosa has agreed not to participate in the par rights offering, and par rights that would otherwise be distributed to Appaloosa will be instead distributed to the other holders of record of our common stock as of the record date for the rights offerings.

 

As of March 10, 2008, based on their most recently filed Schedules 13D or Form 4, as the case may be, the Investors and their affiliates beneficially owned a total of 125,739,448 shares, or 22.3%, of our outstanding common stock. On the effective date of the Plan, following the cancellation of all existing shares of our common stock and all of our other existing equity securities outstanding prior to the effective date of the Plan and following the funding of the Investors’ equity commitments, each of ADAH, Del-Auto, Merrill, UBS, Goldman and Pardus and their respective affiliates would beneficially own either (1) assuming the original rights holders exercise all of their rights in the rights offerings and each Investor purchases no shares of common stock pursuant to its backstop commitment in the discount rights offering, a total of 14,438,623, 5,031,776, 1,607,481, 1,612,167, 3,452,693 and 8,041,408 shares, respectively, or 10.7%, 3.7%, 1.2%, 1.2%, 2.6% and 6.0%, respectively, of the outstanding common stock of reorganized Delphi, or (2) assuming rights holders (other than the Plan Investors and their affiliates) exercise no rights in the rights offerings and each Investor purchases the full amount of its backstop commitment in the discount rights offering, a total of

16,829,014, 10,150,735, 2,013,967, 2,018,653, 10,894,441 and 12,835,849 shares, respectively, or 12.5%, 7.5%, 1.5%, 1.5%, 8.1% and 9.5%, respectively, of the outstanding common stock of reorganized Delphi, in each case assuming (i) conversion of all of the Investors’ shares of Senior Convertible Preferred Stock and taking into account shares of common stock of reorganized Delphi received by certain Investors and their affiliates in their capacity as stockholders and creditors of Delphi pursuant to the Plan (including any shares received pursuant to the exercise by the Investors of discount rights in the discount rights offering), (ii) no exercise of par rights, (iii) no exercise of Warrants, (iv) 17,237,418 shares of common stock of reorganized Delphi are issued to creditors in respect of their Trade and Other Unsecured Claims (as defined in the Plan) in an aggregate amount of approximately $1.31 billion and (v) 16,508,176 shares of Series C Convertible Preferred Stock are issued to GM (and are converted into shares of common stock of reorganized Delphi, initially on a one-for-one basis). References to the number of shares and percentage ownership are further estimated based on our assumptions regarding, among other things, allowed accrued post-petition interest. Assumptions made with respect to the exercise of rights and warrants and the conversion of convertible securities for the purposes of this paragraph differ from the assumptions used elsewhere in this prospectus in stating the maximum number of shares of reorganized Delphi common stock outstanding on, or as promptly as practicable after, the effective date of the Plan and from those set forth under “Unaudited Pro Forma Condensed Consolidated Financial Information.”The Investors have the ability under the EPCA, prior to the date that the registration statement of which this prospectus forms a part is declared effective under the Securities Act, to arrange for a limited number of additional investors to whom the Investors may sell, in accordance with the EPCA and applicable securities laws, any shares of common stock of reorganized Delphi that they purchase pursuant to the Plan and the EPCA. Some of the Investors have informed us that they have arranged or intend to arrange for such sales to additional investors. The amount and percentage of shares to be owned by the Investors gives effect to the expected sale of shares of common stock of reorganized Delphi to such additional investors. For the number of shares that each Investor has informed us that it expects to sell to such additional investors, see “Effects of the Rights Offering on the Investors’ and GM’s Ownership.” Such sales to additional investors may be made by the Investors directly to such additional investors, or may be made by Delphi directly to such additional investors, and may substantially decrease the Investors’ ownership percentage in reorganized Delphi. The additional investors will have the rights of the Investors from whom they purchase common stock of reorganized Delphi under the registration rights agreement. See “Capitalization” and “Effects of the Rights Offerings on the Investors’ Ownership,” “Certain Relationships and Related Transactions — Registration Rights Agreement,” “Use of Proceeds.”

 

The Investors are not soliciting participation by the holders of rights in the rights offerings or engaging in any other marketing or sales activity in connection with the rights offerings. However, each Investor (other than certain Investors, including Merrill) may use their prospectus to offer and sell discount rights, common stock of reorganized Delphi issuable upon exercise of discount rights or common stock of reorganized Delphi issuable in connection with such Investor’s backstop of the discount rights offering from time to time, as determined by such selling Investor. See “Plan of Distribution.”

 

 

 

 

 

 

 

 

 

 

Georgeson Inc.

199 Water Street, 26th Floor

New York, NY 10038

 

 

 

PROSPECTUS SUMMARY

	•	Electronics and Safety, which includes audio, entertainment and communications, safety systems, body controls and security systems, displays, mechatronics and power electronics, as well as advanced development of software and silicon;

	•	Powertrain Systems, which includes extensive systems integration expertise in gasoline, diesel and fuel handling and full end-to-end systems including fuel injection, combustion, electronics controls, exhaust handling, and test and validation capabilities;

	•	Electrical/Electronic Architecture, which includes complete electrical architecture and components products;

	•	Thermal Systems, which includes Heating, Ventilating and Air Conditioning systems, components for multiple transportation and other adjacent markets, commercial/industry applications and powertrain cooling and related technologies;

	•	Automotive Holdings Group, which includes non-core product lines and plant sites that do not fit our future strategic framework; and

	•	Corporate and Other, which includes the Product and Service Solutions business which is comprised of independent aftermarket, diesel aftermarket, original equipment service, consumer electronics and medical systems, in addition to the expenses of corporate administration, other expenses and income of a non-operating or strategic nature, including certain historical pension, postretirement and workers’ compensation benefit costs, and the elimination of inter-segment transactions.

 

THE OFFERING

Rights		We are distributing to Eligible Holders, at no charge (except as described below), transferable rights (the “discount rights”) to purchase up to a total of 41,026,309 shares of common stock of reorganized Delphi. Each Eligible Holder will receive, for each $99.07 of such Eligible Holder’s Eligible Claim, one discount right.

		We are distributing to holders of our common stock, at no charge, nontransferable rights (the “par rights”) to purchase up to a total of 21,680,996 shares of common stock of reorganized Delphi. Each holder of our common stock will receive one par right for each 26 shares of our common stock owned of record at 5:00 p.m., New York City time, on January 17, 2008, the date on which the confirmation hearing with respect to the Plan commenced before the Bankruptcy Court.

		Discount rights distributed are subject to the procedures described above under “Questions and Answers About the Rights Offerings — Overview of Rights Offerings — What is the discount rights offering and who is eligible to participate?” to the extent that the provisional allowance or estimation results in a particular Eligible Holder receiving more discount rights than such Eligible Holder should have received based on the ultimate allowed amount of such claim and such discount rights are transferred or exercised.

Exercise Price		Each discount right carries with it a “basic subscription privilege” and an “oversubscription privilege.” The basic subscription privilege entitles each Eligible Holder to purchase one share of common stock of reorganized Delphi for $38.39 in cash per full share. The “oversubscription privilege” entitles each Eligible Holder who fully exercises its basic subscription privilege to subscribe, prior to the expiration date of the discount rights offering, for additional shares of common stock of reorganized Delphi for an exercise price of $38.64 in cash per full share to the extent that any shares are not purchased by other Eligible Holders under their basic subscription privilege as of the expiration date of the discount rights offering. If an insufficient number of shares are available to fully satisfy oversubscription privilege requests, the available shares, if any, will be allocated pro rata among Eligible Holders who exercised their oversubscription privilege based upon the number of shares each oversubscribing Eligible Holder subscribed for under its basic subscription privilege. If there is a pro rata allocation of the remaining shares and an Eligible Holder receives an allocation of a greater number of shares than it subscribed for under its oversubscription privilege, then we will allocate to such Eligible Holder only the number of shares for which it subscribed under its oversubscription privilege, and we will allocate all remaining shares pro rata among all other Eligible Holders who exercised their oversubscription privileges on the same basis as described above.

		Each par right entitles the holder to purchase one share of common stock of reorganized Delphi for $59.61 in cash per full share. There is no oversubscription privilege in the par rights offering.

		We will not issue fractional par rights, however, we will issue fractional discount rights. Because fractional par rights will not be issued

		in the par rights offering, and cash will not be paid in lieu of fractional par rights in the par rights offering, you will need to hold at least 26 shares of common stock in order to receive one par right. If you hold fewer than 26 shares of common stock, you will not receive any par rights. Otherwise, the number of par rights that you receive will be rounded to the nearest whole number, with such adjustments as we may determine in our sole discretion are necessary so that we offer 21,680,996 shares of common stock of reorganized Delphi to record holders in the par rights offering.

		A fractional discount right will not be exercisable unless it is aggregated with other fractional discount rights so that when exercised, in the aggregate, such fractional discount rights result in the purchase of a whole share of common stock of reorganized Delphi. In other words, fractional discount rights cannot be exercised for fractional shares of common stock of reorganized Delphi and must be combined so that reorganized Delphi issues only whole shares of common stock. Accordingly, if you hold fractional discount rights, you will lose any value represented by those fractional discount rights unless you sell them or you purchase from another Eligible Holder a sufficient amount of fractional discount rights to acquire upon exercise a whole share of common stock of reorganized Delphi.

		Although the discount rights offering and the par rights offering are being conducted concurrently, they are independent of one another. Therefore, to the extent you are eligible to receive and exercise discount rights and/or par rights, you may choose to exercise, as applicable, only discount rights, only par rights, both discount rights and par rights or no rights at all.

Record Date		5:00 p.m., New York City time, on January 17, 2008, which was the date used to determine the Eligible Holders and the stockholders, as applicable, entitled to receive rights.

Expiration		The rights expire, if not previously exercised, at 5:00 p.m., New York City time, on March 31, 2008, unless the applicable exercise period is extended. The rights offerings currently are scheduled to expire prior to the effective date of the Plan. We cannot assure you that the terms of the Plan will not change due to market conditions, the Bankruptcy Court’s requirements or otherwise after the expiration of the rights offerings and prior to the effective date of the Plan, even though you will have no right to withdraw your exercise of rights after the applicable withdrawal deadline except in the limited circumstances described below under “— Withdrawal of Exercise of Rights.”

Shares of Common Stock Outstanding After the Rights Offerings		If the Plan becomes effective, on the effective date of the Plan, all existing shares of our common stock, and any options, warrants, rights to purchase shares of our common stock or other equity securities (excluding the right to receive shares of common stock of reorganized Delphi as a result of the exercise of rights in the rights offerings) outstanding prior to the effective date of the Plan will be canceled, and there will be outstanding up to 160,124,155 shares of common stock of reorganized Delphi, assuming (1) conversion of all of the up to 35,381,155 shares of Convertible Preferred Stock (convertible at

		any time into shares of common stock of reorganized Delphi, initially on a one-for-one basis) that may be issued under the Plan (assuming the issuance of 16,508,176 shares of Series C Convertible Preferred Stock to GM under the Plan), (2) no exercise of par rights and exercise in full of discount rights (or the backstop commitment of the Investors of the discount rights offering), which rights are exercisable to purchase up to a total of 41,026,309 shares of common stock of reorganized Delphi, and (3) exercise in full of the warrants and exercise in full of the other Delphi warrants to be issued pursuant to the Plan, which warrants and other Delphi warrants initially will be exercisable to purchase up to a total of 25,113,275 shares of common stock of reorganized Delphi. The 160,124,155 share figure assumes that 17,237,418 shares of common stock of reorganized Delphi are issued to creditors in respect of their Trade and Other Unsecured Claims in an aggregate amount of approximately $1.31 billion, which number of shares is subject to upward or downward adjustment depending on the value of those claims and is further estimated based on our assumptions regarding, among other things, allowed accrued post-petition interest. See “Capitalization.”

Investors		ADAH, Del-Auto, Merrill, UBS, Goldman and Pardus are the Investors.

Backstop Commitment		The Investors have agreed, on the terms and subject to the conditions of the EPCA, to backstop the discount rights offering by purchasing from us on the effective date of the Plan, at the $38.39 in cash per full share basic subscription privilege exercise price, any shares of common stock of reorganized Delphi being offered in the discount rights offering that are not purchased pursuant to the exercise of discount rights. We have paid the Investors a fee of approximately $39 million for their backstop commitment.

		The backstop commitment of the Investors does not apply to the par rights offering. If fewer than all of the par rights are exercised in the par rights offering, the shares of common stock of reorganized Delphi offered in the par rights offering that are not purchased pursuant to the exercise of par rights will be issued to certain of our creditors in partial satisfaction of certain of their claims (or, in the case of GM, as shares of Series C Convertible Preferred Stock issued to GM under the Plan).

		On the effective date of the Plan, following the cancellation of all existing shares of our common stock and all of our other existing equity securities outstanding prior to the effective date of the Plan and following the funding of the Investors’ equity commitments, each of ADAH, Del-Auto, Merrill, UBS, Goldman and Pardus and their respective affiliates would beneficially own either (1) assuming the original rights holders exercise all of their rights in the rights offerings and each Investor purchases no shares of common stock pursuant to its backstop commitment in the discount rights offering, a total of 14,438,623, 5,031,776, 1,607,481, 1,612,167, 3,452,693 and 8,041,408 shares, respectively, or 10.7%, 3.7%, 1.2%, 1.2%, 2.6% and 6.0%, respectively, of the outstanding common stock of reorganized Delphi, or (2) assuming rights holders (other than the Plan Investors and their affiliates) exercise no rights in the rights offerings and each Investor purchases the full amount of its backstop

		commitment in the discount rights offering, a total of 16,829,014, 10,150,735, 2,013,967, 2,018,653, 10,894,441 and 12,835,849 shares, respectively, or 12.5%, 7.5%, 1.5%, 1.5%, 8.1% and 9.5%, respectively, of the outstanding common stock of reorganized Delphi, in each case assuming (i) conversion of all of the Investors’ shares of Senior Convertible Preferred Stock and taking into account shares of common stock of reorganized Delphi received by certain Investors and their affiliates in their capacity as stockholders and creditors of Delphi pursuant to the Plan (including any shares received pursuant to the exercise by the Investors of discount rights in the discount rights offering), (ii) no exercise of par rights, (iii) no exercise of Warrants, (iv) 17,237,418 shares of common stock of reorganized Delphi are issued to creditors in respect of their Trade and Other Unsecured Claims in an aggregate amount of approximately $1.31 billion and (v) 16,508,176 shares of Series C Convertible Preferred Stock are issued to GM (and are converted into shares of common stock of reorganized Delphi, initially on a one-for-one basis). References to the number of shares and percentage ownership are further estimated based on our assumptions regarding, among other things, the ultimate amount of unsecured claims, cure amounts and allowed accrued post-petition interest. Assumptions made with respect to the exercise of rights and warrants and the conversion of convertible securities for the purposes of this paragraph differ from the assumptions used elsewhere in this prospectus in stating the maximum number of shares of reorganized Delphi common stock outstanding on, or as promptly as practicable after, the effective date of the Plan and from those set forth under “Unaudited Pro Forma Condensed Consolidated Financial Information.” The Investors have the ability under the EPCA, prior to the date that the registration statement of which this prospectus forms a part is declared effective under the Securities Act, to arrange for a limited number of additional investors to whom the Investors may sell, in accordance with the EPCA and applicable securities laws, any shares of common stock of reorganized Delphi that they purchase pursuant to the Plan and the EPCA. Some of the Investors have informed us that they have arranged or intend to arrange for such sales to additional investors. The amount and percentage of shares to be owned by the Investors gives effect to the expected sale of shares of common stock of reorganized Delphi to such additional investors. For the number of shares that each Investor has informed us that it expects to sell to such additional investors, see “Effects of the Rights Offering on the Investors’ and GM’s Ownership.” Such sales to additional investors may be made by the Investors directly to such additional investors, or may be made by Delphi directly to such additional investors, and may substantially decrease the Investors’ ownership percentage in reorganized Delphi. The additional investors will have the rights of the Investors from whom they purchase under the registration rights agreement. See “Certain Relationships and Related Transactions — Registration Rights Agreement,” “The Rights Offerings — Backstop Commitment,” “Use of Proceeds,” “Capitalization” and “Effects of the Rights Offerings on the Investors’ Ownership.”

		The Investors are not soliciting participation by the holders of rights in the rights offerings or engaging in any other marketing or sales activity in connection with the rights offerings. However, each Investor (other than certain Investors, including Merrill) may use this prospectus to offer and sell discount rights, common stock of reorganized Delphi issuable upon exercise of discount rights or common stock of reorganized Delphi issuable in connection with such Investor’s backstop of the discount rights offering from time to time, as determined by such selling Investor. See “Plan of Distribution.”

		The Investors’ backstop commitment and commitment to make the additional equity investments are subject to the satisfaction of numerous conditions which are more fully described under “Certain Relationships and Related Transactions — Equity Purchase and Commitment Agreement.”

Procedures for Exercise		If you hold securities out of which your Eligible Claim arises or your shares of common stock, as applicable, through a brokerage account, bank or other nominee, your broker, bank or nominee should contact you to inquire as to whether or not you wish to exercise your rights. Your broker, bank or nominee, as the case may be, will act on your behalf if you wish to exercise your rights.

		If you do not hold securities out of which your Eligible Claim arises or your shares of common stock, as applicable, through a brokerage account, bank or other nominee (i.e., you are a registered holder and hold a physical certificate), to exercise your rights you must properly complete and sign your rights certificate(s) and deliver your rights certificate(s) to the rights agent. Delivery of your rights certificate(s) must be accompanied by full payment of the applicable exercise price for each share you wish to purchase. See “The Rights Offerings — Exercise of Rights” and “— Payment of Exercise Price.”

		If you are a resident of, or have your principal place of business in, Texas, you will only be entitled to exercise discount rights if you certify to the rights agent that you are within one of specified categories of persons under Texas state securities laws. See “For Texas Residents Only” on page v of this prospectus and “— Blue Sky Laws” below. We and the rights agent, as applicable, have the discretion to delay or to refuse to distribute any shares you may elect to purchase through the exercise of discount rights if we deem it necessary to comply with Texas state securities or blue sky laws.

Oversubscription Privilege in Discount Rights Offering		There is no oversubscription privilege in the par rights offering. If a rights holder does not fully exercise its par rights, those unexercised rights will expire.

		Each discount right entitles each Eligible Holder who fully exercises its basic subscription privilege to subscribe, prior to the expiration date of the discount rights offering, for additional shares of common stock of reorganized Delphi for an exercise price of $38.64 in cash per full share to the extent that any shares are not purchased by other Eligible Holders under their basic subscription privileges, as of the expiration date of the discount rights offering. If an insufficient number of shares are available to fully satisfy oversubscription privilege requests, the

		available shares, if any, will be allocated pro rata among Eligible Holders who exercised their oversubscription privilege based upon the number of shares each oversubscribing Eligible Holder subscribed for under its basic subscription privilege. If there is a pro rata allocation of the remaining shares and an Eligible Holder receives an allocation of a greater number of shares than it subscribed for under its oversubscription privilege, then we will allocate to such Eligible Holder only the number of shares for which it subscribed under its oversubscription privilege, and we will allocate the remaining shares pro rata among all other Eligible Holders who exercised their oversubscription privileges on the same basis as described above.

		Any shares of common stock of reorganized Delphi for which unexercised discount rights would have otherwise been exercisable will be purchased by the Investors, and any shares of common stock of reorganized Delphi for which unexercised par rights would have otherwise been exercisable will be issued to certain of our creditors in partial satisfaction of certain of their claims (or, in the case of GM, as shares of Series C Convertible Preferred Stock issued to GM under the Plan). See “Use of Proceeds.”

Transferability of Rights		The par rights are not transferable. The discount rights are transferable until 5:00 p.m., New York City time, on the business day prior to the expiration date of the discount rights offering. Unless the discount rights offering is extended, the deadline for transfer of discount rights will be 5:00 p.m., New York City time, on March 28, 2008. However, if you are a resident of, or have your principal place of business in, Texas, you will be entitled to transfer discount rights only if you certify to the rights agent that you are within one of specified categories of persons under Texas state securities laws. In addition, regardless of your residence or principal place of business, if you desire to transfer discount rights to a person or entity that is a resident of, or has its principal place of business in, Texas, as a condition to that transfer, you or the proposed transferee must certify to the rights agent that the proposed transferee is within one of specified categories of persons under Texas state securities law. See “For Texas Residents Only” and “For All Holders of Discount Rights Who Desire to Transfer Discount Rights to a Resident of Texas” on page v of this prospectus, ‘The Rights Offerings — State Securities and Blue Sky Matters” and “The Rights Offerings — Transferability of Rights and Listing.”

No Listing of Rights		The rights will not be listed on any securities exchange or quoted on any automated quotation system. We intend, however, to cooperate with any registered broker-dealer who may seek to initiate price quotations for the discount rights on the OTC Bulletin Board. The ability to trade the discount rights on the OTC Bulletin Board is entirely dependent upon registered broker-dealers applying to the OTC Bulletin Board to initiate quotation of the discount rights. Other than furnishing to registered broker-dealers copies of this prospectus and documents filed as exhibits to the registration statement of which this prospectus forms a part, we will have no control over the process of quotation initiation on the OTC Bulletin Board. We cannot assure

		you that the discount rights will be quoted on the OTC Bulletin Board or that an active trading market for the rights will exist. Because the par rights are not transferable, there will be no trading market for the par rights.
Issuance of Common Stock		If you properly exercise your rights and the Plan becomes effective, you will be deemed to own the shares on the effective date of the Plan. We will issue shares of common stock of reorganized Delphi for which rights are exercised as soon as practicable after the effective date of the Plan. No interest will be paid to you on the funds you deposit with the rights agent.

Blue Sky Laws		We have received qualification of the rights offerings from all required state securities commissions, except with respect to the discount rights offering in Texas. As a result, if you are a resident of, or have your principal place of business in, Texas, you will be entitled to exercise or transfer discount rights only if you certify to the rights agent that you are within one of specified categories of persons under Texas state securities laws. In addition, regardless of your residence or principal place of business, if you desire to transfer discount rights to a person or entity that is a resident of, or has its principal place of business in, Texas, as a condition to that transfer, you or the proposed transferee must certify to the rights agent that the proposed transferee is within one of specified categories of persons under Texas state securities law. See “For Texas Residents Only” and “For All Holders of Discount Rights Who Desire to Transfer Discount Rights to a Resident of Texas” on page v of this prospectus and “The Rights Offerings — State Securities and Blue Sky Matters.” We and the rights agent, as applicable, have the discretion to delay or to refuse to distribute any shares you may elect to purchase through the exercise of discount rights, and to delay or refuse to effect any transfer of discount rights, if we deem it necessary to comply with Texas state securities or blue sky laws.

Withdrawal of Exercise of Rights		Your exercise of rights may be validly withdrawn at any time prior to the applicable withdrawal deadline, but not thereafter, except as set forth in the second following paragraph. Unless the applicable rights offering is extended, the withdrawal deadline will be 5:00 p.m., New York City time, on March 26, 2008. For a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be received by the rights agent prior to the withdrawal deadline at its address set forth under “The Rights Offerings — Delivery of Rights Certificates and Payment.”

		Although the discount rights offering and the par rights offering are being conducted concurrently, they are independent of one another. Therefore, to the extent you are eligible to receive and exercise discount rights and/or par rights, if you choose to withdraw your exercise of rights, you may choose to withdraw only discount rights, withdraw only par rights, or withdraw all of your rights, in each case in accordance with the procedures set forth in this prospectus.

		We intend to provide you with the right to withdraw your previous exercise of rights after the applicable withdrawal deadline only if there are changes to the Plan after the withdrawal deadline that the

		Bankruptcy Court determines are materially adverse to the holders of the par rights or discount rights, as the case may be, and the Bankruptcy Court requires resolicitation of votes under section 1126 of the Bankruptcy Code or an opportunity to change previously cast acceptances or rejections of the Plan. If you withdraw your exercise of rights under such circumstances and in accordance with the withdrawal procedures described in this prospectus, we will return to you your exercise payments with respect to any rights so withdrawn, without interest. If (1) we provide rights holders with withdrawal rights and (2) either (a) we and the Investors have not entered into an amendment to the EPCA providing that the Investors’ backstop commitment applies to any discount rights that are so withdrawn, or (b) we have not otherwise established funding for the Plan, then we may terminate the rights offerings, and, under such circumstances, the Plan that includes the rights offerings described in this prospectus may not become effective. If you so withdraw your rights, we will return to you your exercise payments, without interest. We can give no assurance, however, that if we grant withdrawal rights to holders that we and the Investors will enter into an amendment to the EPCA or that we will otherwise establish funding for the Plan as described above. In addition, if the EPCA otherwise terminates after the expiration date, then we may terminate the rights offerings, the Plan that includes the rights offerings described in this prospectus may not become effective, and, under such circumstances, we will return to you your exercise payments, without interest.

Use of Proceeds		Our total gross proceeds from the rights offerings (assuming that all par rights are exercised) will be up to approximately $2.9 billion before deducting fees, including the Investors’ backstop commitment fee, and expenses related to the rights offerings. We will receive gross proceeds of up to approximately $1.6 billion from the sale of shares of common stock of reorganized Delphi in connection with the discount rights offering before deducting fees, including the Investors’ backstop commitment fee, and expenses related to the discount rights offering, regardless of the number of discount rights exercised, as a result of the backstop commitment of the Investors. The net proceeds from the discount rights offering will be used to make payments and distributions contemplated by the Plan and for general corporate purposes. If any shares of common stock of reorganized Delphi are purchased pursuant to the exercise of the oversubscription privilege in the discount rights offering, we will receive additional gross proceeds of $0.25 per share of common stock purchased pursuant to the oversubscription privilege, which additional proceeds will be distributed pro rata to Eligible Holders that did not exercise or transfer any of their discount rights in the discount rights offering based on the ultimate allowed amount of each such holder’s Eligible Claim. We will receive gross proceeds of up to approximately $1.3 billion from the sale of shares of common stock of reorganized Delphi in connection with the par rights offering (assuming that all par rights are exercised), before deducting fees and expenses related to the par rights offering. The net proceeds from the par rights offering will be used to satisfy certain liquidity requirements, to satisfy certain claims of our unions, to reduce the amount of preferred stock distributed to GM and to partially

		satisfy certain claims of certain unsecured creditors as described under “Use of Proceeds.”

		We intend to use the net proceeds from the rights offerings and the $975 million from the additional equity investments in reorganized Delphi by the Investors, together with borrowings under our exit financing, to the extent obtained, if at all, to make payments and distributions contemplated by the Plan and for general corporate purposes. See “Use of Proceeds” for a description of the application of the proceeds of the rights offerings and the Plan.

No Recommendation		Neither we nor our Board of Directors has made any recommendation as to whether or not you should exercise your rights. We have been informed by the Investors that they have not made any recommendation as to whether or not any holder of rights should exercise their rights. You should make an independent investment decision about whether or not to exercise your rights. If you do not exercise or sell your rights, you will lose any value represented by your rights and your percentage ownership interest in us will be diluted.

Termination of Rights Offering		We currently have no intention of terminating the rights offerings, but we reserve the right to terminate the rights offerings, subject to our obligations under the EPCA to use our reasonable best efforts to complete the rights offerings. Completion of the rights offerings is a condition of the Investors’ obligations under the EPCA. If we terminate the rights offerings and the Investors and we do not waive the condition that the rights offerings shall have occurred, the equity investments pursuant to the EPCA will not occur, and we may not be able to raise the cash needed to fund the Plan. If the rights offerings are withdrawn or terminated, the rights agent will return all exercise payments as soon as practicable. No interest will be paid to you on the funds you deposit with the rights agent.

Transferability of Common Stock		Unless you are our affiliate, you generally may sell the shares that you are purchasing on exercise of your rights immediately after you are deemed to own such shares on the effective date of the Plan. We have agreed to provide the Investors, GM and certain creditors with registration rights that would allow them to resell shares of common stock (and shares of certain Senior Convertible Preferred Stock) of reorganized Delphi that they acquire pursuant to the Plan or upon conversion of shares of Convertible Preferred Stock, and, in the case of the Investors, that they otherwise own after the effective date of the Plan. See “Certain Relationships and Related Transactions — Registration Rights Agreement.”

Trading of Common Stock		Our outstanding common stock is quoted on the Pink Sheets, a quotation service for over the counter (“OTC”) securities, under the symbol “DPHIQ.” On January 16, 2008, the last trading day prior to the record date, the last reported sale price for our common stock on the Pink Sheets was $0.15 per share.

		We intend to apply to list the common stock of reorganized Delphi on the New York Stock Exchange or, if approved by ADAH, the Nasdaq Global Select Market, if and when we meet the respective listing requirements. There can be no assurances, however, that we will meet the respective listing requirements on the effective date of the Plan or

		at any time thereafter. Therefore, the shares of common stock of reorganized Delphi may not be listed or quoted on the New York Stock Exchange, the Nasdaq Global Select Market or any other securities exchange or quotation system at the time they are issued on the effective date of the Plan. Although we have an obligation under the EPCA to use our commercially reasonable efforts to list the shares of common stock of reorganized Delphi on the New York Stock Exchange or, if approved by ADAH, the Nasdaq Global Select Market, we cannot assure you that the common stock of reorganized Delphi will ever be listed on the New York Stock Exchange, the Nasdaq Global Select Market or any other securities exchange or quotation system. If we are not able to list the common stock of reorganized Delphi on the New York Stock Exchange or any other securities exchange or quotation system, we intend to cooperate with any registered broker-dealer who may seek to initiate price quotations for the common stock of reorganized Delphi on the OTC Bulletin Board. Other than furnishing to registered broker-dealers copies of this prospectus and documents filed as exhibits to the registration statement of which this prospectus forms a part, we will have no control over the process of quotation initiation on the OTC Bulletin Board. We cannot assure you that the common stock of reorganized Delphi will be quoted on the OTC Bulletin Board or that an active trading market for the common stock of reorganized Delphi will exist.

Material United States Federal Income Tax Consequences of Discount Rights Offering to an Eligible Holder		The material United States federal income tax consequences to an Eligible Holder depend upon whether the Eligible Claims constitute “securities” for United States federal income tax purposes. If such Eligible Claims constitute securities, an Eligible Holder that exchanges its Eligible Claims for newly-issued common stock and discount rights pursuant to the Plan generally should not recognize gain or loss on the receipt of the discount rights. If such Eligible Claims do not constitute securities, a holder that exchanges its Eligible Claims for newly-issued common stock and discount rights pursuant to the Plan generally should recognize gain or loss on the receipt of the discount rights. You should refer to “United States Federal Income Tax Considerations” for a more complete discussion, including additional qualifications and limitations. In addition, you should consult your own tax advisor as to the tax consequences to you of the receipt, exercise, disposition and expiration of the discount rights, and the ownership and disposition of common stock received as a result of the exercise of the discount rights, in light of your particular circumstances.

Material United States Federal Income Tax Consequences of Par Rights Offering to a Holder of Our Common Stock		The material United States federal income tax consequences of the par rights offering to a holder of our common stock depend upon whether such holder receives newly-issued common shares pursuant to the Plan. If a holder of our common stock receives newly-issued common shares pursuant to the Plan, holds shares of our common stock as capital assets, and is not subject to special treatment under United States federal income tax law (e.g., as a bank or dealer in securities),

		the holder generally will not recognize gain or loss on the receipt of par rights. A holder of our common stock that does not receive newly-issued common shares pursuant to the Plan generally will recognize gain or loss on the receipt of par rights. You should refer to “United States Federal Income Tax Considerations” for a more complete discussion, including additional qualifications and limitations. In addition, you should consult your own tax advisor as to the tax consequences to you of the receipt, exercise, disposition and expiration of the par rights, and the ownership and disposition of common stock received as a result of the exercise of the par rights, in light of your particular circumstances.

Rights Agent and Information Agent		Computershare Trust Company, N.A. is acting as rights agent for the rights offerings, and Georgeson Inc. is acting as information agent for the rights offerings.

Risk Factors		Exercising the rights and investing in the common stock of reorganized Delphi involve substantial risks. We urge you to carefully read the “Risk Factors” sections beginning on page 35 of this prospectus and in our Annual Report on Form 10-K for the year ended December 31, 2007, and all other information included or incorporated by reference in this prospectus in its entirety, before you decide whether or not to exercise rights.

Record Date		5:00 p.m., New York City time, on January 17, 2008, which was the date used to determine the Eligible Holders entitled to receive discount rights and the stockholders entitled to receive par rights. The record date was the date on which the confirmation hearing with respect to the Plan commenced in the Bankruptcy Court.

Rights Distribution Date		March 11, 2008.

Expiration Date		Both the discount rights and the par rights expire, if not previously exercised, at 5:00 p.m., New York City time, on March 31, 2008, unless we extend the exercise period applicable to such rights. Any rights unexercised at the end of the applicable exercise period will expire without any payment to the holders with respect to those unexercised rights.

Withdrawal Deadline		Unless we extend the applicable rights offering, the withdrawal deadline will be 5:00 p.m., New York City time, on March 26, 2008.

Transfer Deadline		The transfer deadline is 5:00 p.m., New York City time, on March 28, 2008.

 

An investment in the common stock of reorganized Delphi involves a high degree of risk. You should consider carefully the following information about these risks, together with the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2007, which is incorporated herein by reference, the other information included or incorporated by reference in this prospectus in its entirety before exercising the rights to purchase common stock of reorganized Delphi. Any of the risks we describe below or in the information incorporated herein by reference could cause our business, financial condition and/or operating results to suffer. The market price of the common stock of reorganized Delphi could decline if one or more of these risks and uncertainties develop into actual events. You could lose all or part of your investment. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. Some of the statements in “Risk Factors” are forward-looking statements. For more information about forward-looking statements, please see “Special Note Regarding Forward-Looking Statements.”

 

Risks Related to the Rights Offerings

 

On the effective date of the Plan, all of the shares of common stock owned by you prior to that time will be canceled. Whether or not you exercise your rights, if you currently hold shares of Delphi common stock, your common stock ownership interest will be diluted.

 

On the effective date of the Plan, all existing shares of our common stock, and any options, warrants, rights to purchase shares of our common stock or other equity securities (excluding the right to receive shares of common stock of reorganized Delphi as a result of the exercise of rights in the rights offerings) outstanding prior to the effective date of the Plan will be canceled. As of the record date, there were 563,477,461 shares of our common stock outstanding. On or as soon as practicable after the effective date of the Plan, there will be outstanding up to 160,124,155 shares of common stock of reorganized Delphi (which figure includes shares underlying securities that are convertible into or exercisable for shares of common stock of reorganized Delphi) as follows:

 

 

 

 

 

 

 

 

 

In addition, we will have available for issuance to our employees under the Delphi Corporation 2007 Long-Term Incentive Plan a number of shares of common stock of reorganized Delphi equal to 8% of the number of the fully diluted shares of common stock of reorganized Delphi outstanding immediately following consummation of the Plan and the transactions contemplated thereby. Any such issuance of shares to our employees will dilute your ownership interest in us.

 

To the extent that Trade and Other Unsecured Claims total less than $1.31 billion, the 17,237,418 shares of common stock will be reduced by up to one share for each $59.61 reduction in the total amount of these claims, and the ownership percentages of (but not the number of shares of common stock of reorganized Delphi issued to) the other holders of reorganized Delphi common stock (including rights holders that exercise rights in the rights offerings) will proportionately increase. To the extent that these claims total more than $1.45 billion (including estimated cure amounts but excluding all allowed accrued post-petition interest), a condition of the Plan will not be satisfied. If ADAH and Delphi have each waived the condition to effectiveness of the Plan that such claims total no more than $1.45 billion (including estimated cure amounts but excluding all allowed accrued post-petition interest) and the creditors’ committee has consented or not objected to such waiver, to the extent that such claims total more than $1.475 billion (including estimated cure amounts but excluding all allowed accrued post-petition interest), the 17,237,418 shares of common stock will be increased by up to one share for each $59.61 increase in the total amount of these claims, the ownership percentages of (but not the number of shares of common stock of reorganized Delphi issued to) the other holders of reorganized Delphi common stock (including rights holders that exercise rights in the rights offerings) will proportionately decrease, and we will issue additional shares of common stock to the Investors so that the Investors’ ownership is not diluted and the conversion prices of the Senior Convertible Preferred Stock to be issued to the Investors will be proportionately decreased. There can be no assurance that ADAH will waive such condition. References to the number of shares are further estimated based on our assumptions regarding, among other things, allowed accrued post-petition interest. See “Use of Proceeds,’’ “Capitalization” and “Effects of the Rights Offerings on the Investors’ Ownership.”

 

We will issue a total of 41,026,309 shares of common stock in connection with the discount rights offering, regardless of the number of discount rights exercised, as a result of the backstop commitment of the Investors. The backstop commitment of the Investors does not apply to the par rights offering. However, if fewer than all of the par rights are exercised in the par rights offering, the shares of common stock of reorganized Delphi offered in the par rights offering that are not purchased pursuant to the exercise of par rights will be issued to certain of our creditors in partial satisfaction of certain of their claims (or, in the case of GM, as shares of Series C Convertible Preferred Stock issued to GM under the Plan).

 

Even if you fully exercise your par rights in the par rights offering, if you currently hold shares of Delphi common stock, your common stock ownership interest in reorganized Delphi will be significantly reduced at the effective date of the Plan. If you do not fully exercise your par rights in the par rights offering, your common stock ownership interest will be even further reduced. The magnitude of the reduction of your percentage ownership will depend on the number of shares of common stock, if any, you purchase in the par rights offering. Rights holders who do not exercise their rights or discount rights holders who do not sell their rights prior to the expiration date will lose any value represented by their rights. If we obtain exit financing on terms different from those described below, then the modified terms of the exit financing may have an impact on the value of your investment in reorganized Delphi.

 

Even if rights are exercised in the rights offerings, we will not issue shares of common stock of reorganized Delphi for which those rights are exercised unless and until the Plan becomes effective. Effectiveness of the Plan is subject to a number of conditions, including the obtaining of approximately $6.1 billion of exit financing.

 

Even if you exercise rights, we will only issue shares of common stock of reorganized Delphi for which those rights were exercised if the Plan becomes effective. If the Plan does not become effective, we will refund to you the total amount of the exercise price, if any, paid by you upon exercise of your rights, without interest. Effectiveness of the Plan is subject to a number of conditions, including the completion of the transactions contemplated by the EPCA, the entry of certain orders by the Bankruptcy Court and the obtaining of necessary exit financing. We are currently seeking $6.1 billion of exit financing, an amount that is consistent with the confirmation order of the Plan. The transactions contemplated by the EPCA also are subject to the satisfaction of a number of conditions which are more fully described under “Certain Relationships and Related Transactions — Equity Purchase and Commitment Agreement.” There can be no assurances that such exit financing will be obtained (or if obtained, the terms thereof) or such other conditions will be satisfied, and we cannot assure you that the Plan will become effective on the terms described in this prospectus or at all.

 

In addition, if the Plan does not become effective before March 31, 2008, certain pension funding waivers that we have received from the United States Internal Revenue Service (the “IRS”) will expire. Without meeting this deadline or receiving additional waivers from the IRS, failure of the Plan to become effective by March 31, 2008 could result in a significant tax assessment against us and a drawing down by the Pension Benefit Guaranty Corporation (the “PBGC”) of letters of credit totaling approximately $160 million. Although we would vigorously contest the validity of any such tax assessment, there can be no assurance that we would be successful in such a challenge.

 

We may not be able to obtain sufficient exit financing to support the Plan, and the terms of the exit financing we obtain, if any, may differ from those described in this prospectus and such terms could adversely affect reorganized Delphi and your investment.

 

Effectiveness of the Plan and consummation of the transactions contemplated by the EPCA are subject to a number of conditions, including obtaining exit financing. We are seeking on the effective date of the Plan to replace our debtor-in-possession financing with approximately $6.1 billion of new exit financing. The $6.1 billion exit financing package is expected to include a $1.6 billion asset-backed revolving credit facility, at least $1.7 billion of first-lien term loan, an up to $2.0 billion first-lien term note to be issued to an affiliate of GM (junior to the $1.7 billion first-lien term loan), and a $825 million second-lien term loan, of which any unsold portion would be issued to GM and/or its affiliates. The EPCA further provides the Investors certain rights to review the terms of the exit financing we obtain in light of the financing and other related conditions and covenants of the EPCA, including a limitation that our pro forma interest expense (calculated in accordance with the provisions of the EPCA) during 2008 with respect to our total indebtedness, as defined in the EPCA, will not exceed $585 million. We do not have sufficient firm commitments from lenders to complete our exit financing. There can be no assurances that such exit financing can be obtained, or that such financing can be obtained on the terms we are seeking.

 

In addition, if obtained, our exit financing will contain customary restrictive covenants, including, but not limited to, restrictions on the ability of reorganized Delphi and its subsidiaries to incur additional indebtedness, create liens, make investments or specified payments, give guarantees, pay dividends, make capital expenditures

and merge or acquire or sell assets with usual and customary exceptions to such limitations. Such covenants may limit our flexability with respect to the management of our business.

 

Texas state securities laws may limit your ability to exercise or transfer discount rights

 

We have received qualification of the rights offerings from all required state securities commissions, except with respect to the discount rights offering in Texas. As a result, if you are a resident of, or have your principal place of business in, Texas, you will be entitled to exercise or transfer discount rights only if you certify to the rights agent that you are one of the following:

 

(i) an existing security holder of Delphi,

 

(ii) an “accredited investor” (as defined in Rule 501(a)(1)-(4), (7) and (8) under the Securities Act), excluding any self-directed employee benefit plan with investment decisions made solely by persons that are “accredited investors” (as defined in Rule 501(a)(5)-(6) under the Securities Act),

 

(iii) a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act),

 

(iv) a corporation, partnership, trust, estate or other entity (excluding individuals) having a net worth of not less than $5 million or a wholly owned subsidiary of such entity, as long as the entity was not formed for the purpose of acquiring the rights and the underlying shares of common stock of reorganized Delphi, or

 

(v) another exempt person under the Texas state securities laws.

 

In addition, regardless of your residence or principal place of business, if you desire to transfer discount rights to a person or entity that is a resident of, or has its principal place of business in, Texas, as a condition to that transfer, you or the proposed transferee must certify to the rights agent that the proposed transferee is within one of the above specified categories of persons under Texas state securities law.

 

We and the rights agent, as applicable, have the discretion to delay or to refuse to distribute any shares you may elect to purchase through the exercise of discount rights, and delay or refuse to effect any transfer of discount rights, if we deem it necessary to comply with Texas state securities or blue sky laws.

 

Following the withdrawal deadline, your exercise of rights may not be withdrawn, except in very limited circumstances.

 

Once you have exercised your rights, you may withdraw your exercise at any time prior to the applicable withdrawal deadline, but not thereafter, except as set forth in the following paragraph. Unless the applicable rights offering is extended, the withdrawal deadline will be 5:00 p.m., New York City time, on March 26, 2008.

 

We intend to provide you with the right to withdraw your previous exercise of rights after the applicable withdrawal deadline only if there are changes to the Plan after the withdrawal deadline that the Bankruptcy Court determines are materially adverse to the holders of the par rights or discount rights, as the case may be, and the Bankruptcy Court requires resolicitation of votes under section 1126 of the Bankruptcy Code or an opportunity to change previously cast acceptances or rejections of the Plan. If you withdraw your exercise of rights under such circumstances and in accordance with the withdrawal procedures described in this prospectus, we will return to you your exercise payments with respect to any rights so withdrawn, without interest. If (1) we provide rights holders with withdrawal rights and (2) either (a) we and the Investors have not entered into an amendment to the EPCA providing that the Investors’ backstop commitment applies to any discount rights that are so withdrawn, or (b) we have not otherwise established funding for the Plan, then we may terminate the rights offerings, and, under such circumstances, the Plan that includes the rights offerings described in this prospectus may not become effective, and, if you so withdraw your rights and we terminate the rights offerings, we will return to you your exercise payments, without interest. We can give no assurance, however, that if we grant withdrawal rights to holders that we and the Investors will enter into an amendment to the EPCA or that we will otherwise establish funding for the Plan as described above. In addition, if the EPCA otherwise terminates after the expiration date, then we may terminate the rights offerings, the Plan that includes the rights offerings described in this prospectus may not become effective, and, if we terminate the rights offerings, we will return to you your exercise payments, without interest.

 

Following the withdrawal deadline, except in the limited circumstance described above, you may not withdraw your exercise of rights in whole or in part for any reason, including a decline in our common stock price or changes in the Plan, even though we have not already issued the shares to you and the applicable withdrawal deadline has occurred. Even if circumstances arise after you have exercised your rights that causes you to change your mind about investing in the common stock of reorganized Delphi, you will be legally bound to purchase the shares of common stock of reorganized Delphi for which you exercised your rights if the Plan becomes effective.

 

We may make significant changes to the Plan following the expiration of the rights offerings, but you will no longer be able to withdraw your exercise of rights, except in very limited circumstances.

 

The rights offerings are scheduled to expire prior to the effective date of the Plan. We cannot assure you that the terms of the Plan will not change due to market conditions, the Bankruptcy Court’s requirements or otherwise after the expiration of the rights offerings. The Bankruptcy Court will consider the best interests of all claim and equity security holders in Delphi’s chapter 11 cases, and could require changes to the Plan which could have an adverse impact on your interests as a common stockholder. The value of your common stock may also be adversely affected. In addition, we may negotiate other changes to the Plan.

 

Following the applicable withdrawal deadline, your exercise of rights may not be withdrawn in whole or in part for any reason, including a delay in confirmation of the Plan or significant modifications to the Plan, unless there are changes to the Plan after the withdrawal deadline that the Bankruptcy Court determines are materially adverse to the holders of the par rights or discount rights, as the case may be, and the Bankruptcy Court requires resolicitation of votes under section 1126 of the Bankruptcy Code or an opportunity to change previously cast acceptances or rejections of the Plan. If you withdraw your exercise of rights under such circumstances and in accordance with the withdrawal procedures described in this prospectus, we will return to you your exercise payments with respect to any rights so withdrawn, without interest. If (1) we provide rights holders with withdrawal rights and (2) either (a) we and the Investors have not entered into an amendment to the EPCA providing that the Investors’ backstop commitment applies to any discount rights that are so withdrawn, or (b) we have not otherwise established funding for the Plan, then we may terminate the rights offerings, the Plan that includes the rights offerings described in this prospectus may not become effective, and, if you so withdraw your rights and we terminate the rights offerings, under such circumstances, we will return to you your exercise payments, without interest. We can give no assurance, however, that if we grant withdrawal rights to holders that we and the Investors will enter into an amendment to the EPCA or that we will otherwise establish funding for the Plan as described above. In addition, if the EPCA otherwise terminates after the expiration date, then we may terminate the rights offerings, the Plan that includes the rights offerings described in this prospectus may not become effective, and, if we terminate the rights offerings, we will return to you your exercise payments, without interest.

 

Therefore, except in that limited circumstance, even if the Plan is modified after the expiration date, and you change your mind about investing in the common stock of reorganized Delphi, you nonetheless will be legally bound to purchase the shares of common stock of reorganized Delphi for which you exercised your rights if the Plan becomes effective.

 

The commitments of the Investors are conditioned upon specified factors, and if these conditions are not met, we may not be able to raise the proceeds necessary to fund our cash obligations under the Plan, and the Plan may not become effective.

 

The Investors’ obligations under the EPCA are subject to the satisfaction of numerous conditions as described under “Certain Relationships and Related Transactions — Equity Purchase and Commitment Agreement.” Some of these conditions are not in our control. For example, we may not be able to obtain sufficient exit financing, or if we do, we may not be able to satisfy the limitation on interest expense that is a condition to the Investors’ obligations under the EPCA. If we are not able to meet these conditions of any of the other conditions under the EPCA, ADAH may be unwilling to waive the conditions, and, in such case, the Investors would no longer be obligated to purchase any shares of common stock that are not purchased pursuant to the exercise of rights in the discount rights offering or make an additional $975 million equity investment in reorganized Delphi. As a result, we may not be able to raise the proceeds necessary to fund our cash obligations under the Plan, and the Plan may not become effective. If this happens, we may be forced to propose an alternate plan or make significant modifications to our current Plan, any of

which actions could have an adverse impact on your interest as a creditor or common stockholder or the value of your claims or shares of common stock.

 

The exercise price does not reflect a determination of our value or the value of the common stock of reorganized Delphi.

 

Each holder of our common stock will receive one par right for each 26 shares of our common stock owned of record at 5:00 p.m., New York City time, on January 17, 2008. Each Eligible Holder will receive one discount right for each $99.07 of such Eligible Holder’s Eligible Claim. We will not issue fractional shares or cash in lieu of fractional shares. Each discount right entitles the holder to purchase one share of common stock of reorganized Delphi for $38.39 in cash per full share pursuant to the basic subscription privilege (and $38.64 in cash per full share pursuant to the oversubscription privilege), and each par right entitles the holder to purchase one share of common stock of reorganized Delphi for $59.61 in cash per full share. The exercise prices were determined after extensive negotiations and renegotiations with the Investors, the creditors’ committee, the equity committee and GM. With the assistance of our financial advisor and investment banker, we explored alternative investment proposals from several potential investors. Through this process we developed a potential framework for our reorganization plan and our transformation plan. After several months of negotiations, we decided to pursue an agreement with the Investors that was supported by the creditors’ committee, the equity committee and GM, under which the Investors would be willing to provide their investment to support our reorganization and transformation plan. The discount rights exercise price of $38.39 in cash per full share represents a $21.22 per share discount from the $59.61 per full share deemed value for Plan distribution purposes established in the Plan. The par rights exercise price of $59.61 in cash per full share is the same as the per share value of common stock of reorganized Delphi for Plan distribution purposes established in the Plan. Specifically, under the Plan, our creditors will be accepting shares of common stock of reorganized Delphi in partial satisfaction of certain of their claims (or, in the case of GM, as shares of Series C Convertible Preferred Stock issued to GM under the Plan), with such shares being valued for such purposes at $59.61 per full share. The per share discount for the discount rights and the per share deemed value have been approved by the Bankruptcy Court pursuant to the confirmation order confirming the Plan. See “Bankruptcy Cases.” The exercise prices of the rights do not necessarily bear any relationship to the book value of our assets, past operations, cash flows, losses, financial condition or other common criteria used to value equity securities. The exercise prices of the rights should not be considered an indication of the actual value of reorganized Delphi or the shares of its common stock.

 

One or both of the rights offerings may be terminated at any time prior to the expiration date, and neither we nor the rights agent will have any obligation to you except to return your exercise payment, without interest.

 

We may decide not to continue with one or both of the rights offerings, and we may terminate one or both of the rights offerings prior to the expiration date. If one or both of the rights offerings are withdrawn or terminated, the rights agent will return as soon as practicable all exercise payments for that rights offering, without interest, and you will not be able to purchase common stock from us in that rights offering. No interest will be paid to you on the funds you deposit with the rights agent. Completion of the rights offerings is a condition of the Investors’ obligations under the EPCA. If we terminate one or both of the rights offerings and ADAH does not waive the condition that the rights offerings shall have occurred, the Investors’ equity commitment obligations, including their obligation to backstop the discount rights offering by purchasing from us any shares of common stock of reorganized Delphi being offered in the discount rights offering that are not purchased pursuant to the exercise of discount rights and their obligation to make $975 million of additional equity investments in reorganized Delphi, will be discharged, and we may not be able to raise the cash needed to fund the Plan.

 

You must act promptly and follow instructions carefully if you want to exercise your rights.

 

If you desire to exercise rights in either or both of the rights offerings, you and, if applicable, brokers, banks or other nominees acting on your behalf, must act promptly to ensure that all required certificates and payments are actually received by Computershare Trust Company, N.A., the rights agent, prior to the expiration date of the rights offerings. The time period to exercise rights is limited. If you or your broker, bank or other nominee, as applicable,

fails to complete and sign the rights certificate(s), sends an incorrect payment amount or otherwise fails to follow the procedures that apply to the exercise of your rights, we may, depending on the circumstances, reject your exercise of rights or accept it only to the extent of the payment received. Neither we nor the rights agent undertakes to contact you concerning, or attempt to correct, an incomplete or incorrect rights certificate or payment or contact you concerning whether a broker, bank or other nominee holds rights on your behalf. We have the sole discretion to determine whether an exercise properly follows the procedures that apply to the exercise of your rights.

 

No prior market exists for the rights.

 

The rights are a new issue of securities with no established trading market. The par rights are not transferable. The discount rights are transferable until 5:00 p.m., New York City time, on the business day prior to the expiration date of the discount rights offering. Unless the discount rights offering is extended, the deadline for transfer will be 5:00 p.m., New York City time, on March 28, 2008. Unless exercised, the rights will cease to have any value following the expiration date. The rights will not be listed on any securities exchange or quoted on any automated quotation system. We intend, however, to cooperate with any registered broker-dealer who may seek to initiate price quotations for the discount rights on the OTC Bulletin Board. The ability to trade the discount rights on the OTC Bulletin Board is entirely dependent upon registered broker-dealers applying to the OTC Bulletin Board to initiate quotation of the discount rights, which we cannot predict will be initiated or, if initiated, will continue. We can give no assurance that a market for the discount rights will develop or, if a market does develop, as to how long it will continue, the liquidity of the market or at what price the discount rights will trade. Because the par rights are not transferable, there will be no trading market for the par rights.

 

Even if a trading market does develop for the discount rights, the discount rights may expire and be of no value if they are purchased prior to the expiration date but such purchase is not settled before 5:00 p.m., New York City time, on the expiration date.

 

Although we can give no assurance that there will be any trading market for the discount rights, if trading in the discount rights is initiated on the OTC Bulletin Board, we expect that such trading will be on a customary basis in accordance with normal settlement procedures applicable to sales of securities, and that trades effected in discount rights will be required to be settled within three trading days after the trade date. A purchase and sale of discount rights that is effected on the date that is two days prior to the expiration date of the discount rights offering would be required to be settled not later than the time the discount rights will have expired. Therefore, if discount rights are purchased on or after the date that is two days prior to the expiration date, such discount rights may be received after they have already expired and will be of no value.

 

Furthermore, we have not received qualification of the discount rights offering in Texas. As a result, if you are a resident of, or have your principal place of business in, Texas, you will be entitled to exercise or transfer discount rights only if you certify to the rights agent that you are within one of specified categories of persons under Texas state securities laws. In addition, regardless of your residence or principal place of business, if you desire to transfer discount rights to a person or entity that is a resident of, or has its principal place of business in, Texas, as a condition to that transfer, you or the proposed transferee must certify to the rights agent that the proposed transferee is within one of the specified categories of persons under Texas state securities law. See “For Texas Residents Only” and “For All Holders of Discount Rights Who Desire to Transfer Discount Rights to a Resident of Texas” on page v of this prospectus and “The Rights Offerings — State Securities and Blue Sky Matters.” We and the rights agent, as applicable, have the discretion to delay or to refuse to distribute any shares you may elect to purchase through the exercise of discount rights, and to delay or refuse to effect any transfer of discount rights, if we deem it necessary to comply with Texas state securities or blue sky laws.

 

In addition, under the securities laws of some states, shares of common stock can be sold in such states only through registered or licensed brokers or dealers. The requirement of a seller to comply with the requirements of state blue sky laws may lead to delay or inability of a holder of our securities to dispose of such securities, thereby causing an adverse effect on the resale price of our securities and your investment in reorganized Delphi.

If you elect to exercise your rights, your proposed acquisition of common stock may be subject to notification obligations under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

 

Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) and related rules, certain acquisitions of voting securities may not be completed unless certain notification and waiting period requirements have been satisfied. If, as a result of exercising your rights, you would hold shares of common stock of reorganized Delphi worth more than $63.1 million as of the effective date of the Plan, then you and we may be required to make a filing under the HSR Act and wait for any applicable waiting periods to expire or terminate before we can satisfy your exercise of rights. You are encouraged to consult with your counsel regarding the application of the HSR Act to the transactions contemplated hereby.

 

Risks Related to Common Stock of Reorganized Delphi

 

The common stock of reorganized Delphi may not have an active trading market and its public float will be significantly reduced if rights holders do not exercise rights in the rights offerings.

 

There will be up to 160,124,155 shares of common stock of reorganized Delphi outstanding on the effective date of the Plan, not taking into account any conversion of shares of Convertible Preferred Stock, any exercise of rights in the rights offerings (but, in the case of the discount rights offering, assuming the Investors’ backstop commitment) or any exercise of Warrants, compared to approximately 563,477,461 shares of our common stock outstanding as of the record date. The 160,124,155 share figure assumes that 17,237,418 shares of common stock of reorganized Delphi are issued to creditors in respect of their Trade and Other Unsecured Claims in an aggregate amount of approximately $1.31 billion, which number of shares is subject to upward or downward adjustment depending on the value of those claims and is further estimated based on our assumptions regarding, among other things, allowed accrued post-petition interest. In addition, as of the effective date of the Plan, GM will own 16,508,176 shares of Series C Convertible Preferred Stock of reorganized Delphi, which are convertible into shares of common stock of reorganized Delphi, initially on a one-for-one basis. See “Capitalization.”

 

If rights holders do not exercise all of their rights in the rights offerings and the Investors purchase all or a portion of their backstop commitment, the public float of the common stock of reorganized Delphi may be significantly reduced to the extent that the Investors’ shares are excluded from the calculation of the public float. Similarly, if fewer than all of the par rights are exercised in the par rights offering, the shares of common stock of reorganized Delphi offered in the par rights offering that are not purchased pursuant to the exercise of par rights will be issued to certain of our creditors in partial satisfaction of certain of their claims (or, in the case of GM, as shares of Series C Convertible Preferred Stock issued to GM under the Plan), and the public float of the common stock of reorganized Delphi may be further reduced to the extent that these creditors’ shares are excluded from the calculation of the public float.

 

On the effective date of the Plan, following the cancellation of all existing shares of our common stock and all of our other existing equity securities outstanding prior to the effective date of the Plan and following the funding of the Investors’ equity commitments, each of ADAH, Del-Auto, Merrill, UBS, Goldman and Pardus and their respective affiliates would beneficially own either (1) assuming the original rights holders exercise all of their rights in the rights offerings and each Investor purchases no shares of common stock pursuant to its backstop commitment in the discount rights offering, a total of 14,438,623, 5,031,776, 1,607,481, 1,612,167, 3,452,693 and 8,041,408 shares, respectively, or 10.7%, 3.7%, 1.2%, 1.2%, 2.6% and 6.0%, respectively, of the outstanding common stock of reorganized Delphi, or (2) assuming rights holders (other than the Plan Investors and their affiliates) exercise no rights in the rights offerings and each Investor purchases the full amount of its backstop commitment in the discount rights offering, a total of 16,829,014, 10,150,735, 2,013,967, 2,018,653, 10,894,441 and 12,835,849 shares, respectively, or 12.5%, 7.5%, 1.5%, 1.5%, 8.1% and 9.5%, respectively, of the outstanding common stock of reorganized Delphi, in each case assuming (i) conversion of all of the Investors’ shares of Senior Convertible Preferred Stock and taking into account shares of common stock of reorganized Delphi received by certain Investors and their affiliates in their capacity as stockholders and creditors of Delphi pursuant to the Plan (including any shares received pursuant to the exercise by the Investors of discount rights in the discount rights offering), (ii) no exercise of par rights, (iii) no exercise of Warrants, (iv) 17,237,418 shares of common stock of reorganized Delphi are issued to creditors in respect of their Trade and Other Unsecured Claims in an aggregate

amount of approximately $1.31 billion and (v) 16,508,176 shares of Series C Convertible Preferred Stock are issued to GM (and are converted into shares of common stock of reorganized Delphi, initially on a one-for-one basis). References to the number of shares and percentage ownership are further estimated based on our assumptions regarding, among other things, allowed accrued post-petition interest. Assumptions made with respect to the exercise of rights and warrants and the conversion of convertible securities for the purposes of this paragraph differ from the assumptions used elsewhere in this prospectus in stating the maximum number of shares of reorganized Delphi common stock outstanding on, or as promptly as practicable after, the effective date of the Plan and from those set forth under “Unaudited Pro Forma Condensed Consolidated Financial Information.” The Investors have the ability under the EPCA, prior to the date that the registration statement of which this prospectus forms a part is declared effective under the Securities Act, to arrange for a limited number of additional investors to whom the Investors may sell, in accordance with the EPCA and applicable securities laws, any shares of common stock of reorganized Delphi that they purchase pursuant to the Plan and the EPCA. Some of the Investors have informed us that they have arranged or intend to arrange for such sales to additional investors. The amount and percentage of shares to be owned by the Investors gives effect to the expected sale of shares of common stock of reorganized Delphi to such additional investors. For the number of shares that each Investor has informed us that it expects to sell to such additional investors, see “Effects of the Rights Offering on the Investors’ and GM’s Ownership.” Such sales to additional investors may be made by the Investors directly to such additional investors, or may be made by Delphi directly to such additional investors, and may substantially decrease the Investors’ ownership percentage in reorganized Delphi. The additional investors will have the rights of the Investors from whom they purchase common stock of reorganized Delphi under the registration rights agreement (whether or not such shares are issued to the additional investors directly by Delphi). See “Certain Relationships and Related Transactions — Registration Rights Agreement.” There can be no assurance that any of the Investors would actively participate in any trading market for the common stock of reorganized Delphi that may develop. Consequently, it is possible that there would be limited liquidity for the shares of common stock of reorganized Delphi, even if such shares are listed on any securities exchange or traded on the Pink Sheets. See “Use of Proceeds,” “Capitalization” and “Effects of the Rights Offerings on the Investors’ Ownership.”

 

Following our delisting in October 2005 from the New York Stock Exchange, price quotations for our common stock have been available on the Pink Sheets. Delisting from the New York Stock Exchange resulted in a reduction in the liquidity of our common stock. We intend to apply to list the common stock of reorganized Delphi on the New York Stock Exchange or, if approved by ADAH, the Nasdaq Global Select Market, if and when we meet the respective listing requirements. There can be no assurances, however, that we will meet the respective listing requirements on the effective date of the Plan or at any time thereafter. Therefore, the shares of common stock of reorganized Delphi may not be listed on the New York Stock Exchange, the Nasdaq Global Select Market or any other securities exchange or quotation system at the time they are issued on the effective date of the Plan. Although we have an obligation under the EPCA to use our commercially reasonable efforts to list the shares of common stock of reorganized Delphi on the New York Stock Exchange or, if approved by ADAH, the Nasdaq Global Select Market, we cannot assure you that the common stock of reorganized Delphi will ever be listed on the New York Stock Exchange, the Nasdaq Global Select Market or any other securities exchange or quotation system. If we are not able to list or quote the common stock of reorganized Delphi on the New York Stock Exchange or any other securities exchange or quotation system, we intend to cooperate with any registered broker-dealer who may seek to initiate price quotations for the common stock of reorganized Delphi on the OTC Bulletin Board.

 

Trading on the OTC Bulletin Board is dependent on a broker-dealer being willing to make a market in the common stock of reorganized Delphi, which we cannot predict will be initiated or, if initiated, will continue. No assurance can be given that the common stock of reorganized Delphi will be quoted on the OTC Bulletin Board or that an active trading market will exist. The nature of OTC Bulletin Board trading may limit your ability to resell your shares of the common stock of reorganized Delphi if an active trading market for the common stock of reorganized Delphi does not emerge. Even if an active market does develop for the common stock of reorganized Delphi, we can give no assurance as to how long it will continue, the liquidity of the market or at what price the common stock of reorganized Delphi will trade. Lack of liquidity of the common stock of reorganized Delphi also may make it more difficult for us to raise additional capital, if necessary, through equity financings.

The terms of the exit financing will restrict the ability of reorganized Delphi to pay cash dividends on its common stock.

 

On September 8, 2005, our Board of Directors announced the elimination of the quarterly dividend on our common stock. After the Plan becomes effective, the payment of any future dividends on shares of reorganized Delphi will be at the discretion of the Board of Directors of reorganized Delphi and will depend upon various factors, including our earnings, operations, financial condition, cash and capital requirements, restrictions in financing agreements, business conditions and other factors. Under Delaware law, unless a corporation has available surplus, it cannot declare or pay dividends on its capital stock. In addition, we anticipate that our exit financing will include negative covenants, similar to those currently contained in our debtor-in-possession financing, that will restrict or condition our payment of dividends. Because of these limitations, we do not expect to pay dividends on the common stock of reorganized Delphi so long as our exit financing is in effect.

 

The preferred stock to be issued to the Investors and GM on the effective date of the Plan will rank senior to the common stock with respect to the payment of dividends and with respect to distributions upon our liquidation, dissolution or winding up.

 

On the effective date of the Plan, following the funding of the Investors’ equity commitments, reorganized Delphi will issue to the Investors and GM a total of up to 35,381,155 shares of Convertible Preferred Stock (convertible at any time into shares of common stock of reorganized Delphi, initially on a one-for-one basis) (assuming the issuance of 16,508,176 shares of Series C Convertible Preferred Stock to GM). This Convertible Preferred Stock will rank senior to the common stock of reorganized Delphi with respect to the payment of dividends and with respect to distributions if we liquidate, dissolve or wind up. As a result, reorganized Delphi may not pay dividends on shares of its common stock, or make any distributions with respect to its shares of common stock in the event of a liquidation, dissolution or winding up of reorganized Delphi, unless all accrued and unpaid dividends on shares of its preferred stock have been paid in full and holders of preferred stock have been paid in full the liquidation preference of their shares of preferred stock.

 

GM is our largest customer and as such we are particularly sensitive to changes in their production volumes. In addition, our Plan requires that GM make certain payments in support of our overall reorganization plan.

 

GM is our largest customer and accounted for 37% of our total net sales from continuing operations in 2007, and a portion of our non-GM sales are to Tier 1 suppliers who ultimately sell our products to GM. In addition, GM accounts for an even greater percentage of our net sales in North America where we have limited ability to adjust our cost structure to changing economic and industry conditions and where we are faced with high wage and benefit costs. Additionally, our revenues may be affected by decreases in GM’s business or market share.

 

Delphi and GM have entered into comprehensive settlement agreements which were approved by the Bankruptcy Court on January 25, 2008. These settlement agreements are not effective until and unless Delphi emerges from chapter 11. These settlement agreements, among other things, provide that GM will assume approximately $7.3 billion of certain post-retirement benefits for certain of our active and retired hourly employees, including health care and life insurance, and will make significant contributions to Delphi to fund various special attrition programs, consistent with the provisions of the U.S. labor agreements, and significant, ongoing contributions to Delphi and reorganized Delphi to reimburse Delphi for labor costs in excess of $26 per hour, excluding certain costs, including hourly pension and other postretirement benefit contributions.

 

GM has reported a variety of challenges it is facing, including with respect to its debt ratings, its relationships with its unions and large shareholders and its cost and pricing structures. If GM is unable or unwilling to engage in a business relationship with us on a basis that involves improved terms for Delphi, as set forth in the comprehensive settlement agreements that have been agreed to as part of our Plan (as compared to those currently in place), we believe that our sales, cost structure and profitability will be adversely affected.

 

For further information, see the disclosure in our Annual Report on Form 10-K for the year ended December 31, 2007, including under “Business — Arrangements Between Delphi and GM,” “Risk Factors — Business

Environment and Economic Conditions” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is incorporated by reference in this prospectus.

 

The price of our common stock currently is below, and the price of the common stock of reorganized Delphi may be below, the exercise prices of the rights. Our stock price historically has been, and the stock price of shares of reorganized Delphi is likely to continue to be, volatile, and you may lose all or part of your investment in reorganized Delphi.

 

On March 7, 2008, the closing price of our common stock on the Pink Sheets was $0.16 per share, and, as of the record date, there were 563,477,461 shares of our common stock outstanding. Giving effect to the cancellation of all of our existing shares of common stock on the effective date of the Plan, assuming that the total market value of our common stock remains unchanged, and assuming there are 160,124,155 shares of common stock of reorganized Delphi that will be outstanding on, or as soon as practicable after, the effective date of the Plan (assuming conversion of all of the up to 35,381,155 shares of Convertible Preferred Stock (which are convertible at any time into shares of common stock of reorganized Delphi, initially on a one-for-one basis) that may be issued under the Plan (assuming the issuance of 16,508,176 shares of Series C Convertible Preferred Stock to GM under the Plan), no exercise of par rights and exercise in full of discount rights (or the Investors’ backstop commitment of the discount rights offering) and exercise in full of the Warrants at the initial exercise price), the adjusted closing price of our common stock on March 7, 2008 would have been $0.56 per share. This adjusted closing price was determined based on a purely mathematical calculation by dividing total market value by the 160,124,155 shares of common stock of reorganized Delphi and should not be deemed to be indicative of comparative share values.

 

The exercise price of the discount rights is $38.39 in cash per full share of common stock of reorganized Delphi pursuant to the basic subscription privilege (and $38.64 in cash per full share of common stock of reorganized Delphi pursuant to the oversubscription privilege), and the exercise price of the par rights is $59.61 in cash per full share of common stock of organized Delphi. We cannot assure you that the market price of the common stock of reorganized Delphi will not be below the exercise prices of the rights, or decline further below the exercise prices, after the applicable withdrawal deadline for the rights offerings. After the applicable withdrawal deadline for the rights offerings, you will have no withdrawal rights and no right to receive your shares of common stock of reorganized Delphi until the Plan becomes effective. If that occurs, you will suffer an immediate unrealized loss on those shares as a result. The exercise prices of the rights should not be considered an indication of the future trading price of the common stock of reorganized Delphi. The market price of our common stock has been, and the market price of the common stock of reorganized Delphi is likely to continue to be, volatile, experiencing wide fluctuations in response to numerous factors, many of which are beyond our control. Such factors include:

 

 

 

In addition to being dependent upon the implementation of the Plan and the transactions contemplated thereby, our ability to continue on a going-concern basis is dependent upon, among other things, maintaining the support of key vendors and customers, and retaining key personnel, along with financial, business, and other factors, many of which are beyond our control. Even if the Plan becomes effective and we emerge from bankruptcy, the uncertainty regarding these factors following our emergence from bankruptcy and the effect of other unknown adverse factors, could threaten our existence as a going concern. Our independent registered public accounting firm has included a going-concern explanatory paragraph in its report on our consolidated financial statements.

 

Furthermore, the stock market historically has experienced significant price and volume fluctuations. These fluctuations are often unrelated to the operating performance of particular companies. These broad market fluctuations may cause declines in the market price of the common stock of reorganized Delphi. The price of the common stock of reorganized Delphi could fluctuate based upon factors that have little or nothing to do with us or our performance, and these fluctuations could materially reduce our stock price.

 

As a result, you may not be able to resell your shares of the common stock of reorganized Delphi at or above the rights offering exercise prices, and you may lose all or part of your investment in the common stock of reorganized Delphi.

 

Holders of Series A-1 Senior Convertible Preferred Stock have voting rights that may restrict our ability to take corporate actions.

 

On the effective date of the Plan, reorganized Delphi will issue a total of 9,478,887 shares of Series A-1 Senior Convertible Preferred Stock to ADAH (total liquidation value of approximately $400 million). So long as any shares of Series A-1 Preferred Stock are outstanding, reorganized Delphi and its subsidiaries will be prohibited from taking specified actions if all of the holders of the Series A-1 Senior Convertible Preferred Stock object. These specified actions include, subject to limited exceptions:

 

 

 

 

 

If any holder of the Series A-1 Senior Convertible Preferred Stock objects to any of the foregoing actions that we desire to take, it could have an adverse impact on the business and the market price of the common stock of reorganized Delphi.

 

Substantial future sales of shares of the common stock of reorganized Delphi in the public market could cause our stock price to fall.

 

On the effective date of the Plan, all existing shares of our common stock, and any options, warrants, rights to purchase shares of our common stock or other equity securities (excluding the right to receive shares of common stock of reorganized Delphi as a result of the exercise of rights in the rights offerings) outstanding prior to the effective date of the Plan will be canceled. On or as soon as practicable after the effective date of the Plan, following the funding of the Investors’ equity commitments, there will be up to 160,124,155 shares of common stock of reorganized Delphi outstanding, assuming (1) conversion of all of the up to 35,381,155 shares of Convertible Preferred Stock (which are convertible at any time into shares of common stock of reorganized Delphi, initially on a one-for-one basis) that may be issued under the Plan (assuming the issuance of 16,508,176 shares of Series C Convertible Preferred Stock to GM under the Plan), (2) no exercise of par rights and exercise in full of discount

rights (or the Investors’ backstop commitment of the discount rights offering) and (3) exercise in full of the Warrants at the initial exercise price. These newly issued shares will be freely tradable without restriction in the public market, except that any such shares held by our “affiliates,” as the term is defined in Rule 144 under the Securities Act, and any shares of Senior Convertible Preferred Stock issued to the Investors pursuant to the Plan (and any shares of common stock underlying such Senior Convertible Preferred Stock), which shares will constitute “restricted securities,” may generally only be sold in compliance with the restrictions of Rule 144 under the Securities Act or pursuant to an effective registration statement, including registration statements filed pursuant to the registration rights agreement described below. See “Shares Eligible for Future Sale.”

 

In addition, we will have available for issuance to our employees under the Delphi Corporation 2007 Long-Term Incentive Plan a number of shares of common stock of reorganized Delphi equal to 8% of the number of the fully diluted shares of common stock of reorganized Delphi outstanding immediately following consummation of the Plan and the transactions contemplated thereby. Any such issuance of shares to our employees will dilute your ownership interest in us.

 

Holders of Series A-1 Senior Convertible Preferred Stock can elect to convert such preferred stock to Series A-2 Senior Convertible Preferred Stock, whereby they would give up the voting rights described above and obtain the registration rights described below. We have agreed as part of the Plan to grant registration rights to (i) the Investors with respect to all of their shares of common stock of reorganized Delphi , whether acquired pursuant to the Plan or otherwise (which at the effective date of the Plan could be as many as 54,742,659 shares (giving effect to expected sales to additional investors) if each Investor purchases the full amount of its backstop commitment and exercises all of its par rights and discount rights), any shares of Series A-2 Senior Convertible Preferred Stock into which their 9,478,887 shares of Series A-1 Senior Convertible Preferred Stock are converted, all of their 9,394,092 shares of Series B Senior Convertible Preferred Stock and all of the shares of common stock of reorganized Delphi underlying the Series A-2 Senior Convertible Preferred Stock and the Series B Senior Convertible Preferred Stock, (ii) GM with respect to all of the shares of common stock of reorganized Delphi underlying the Series C Convertible Preferred Stock and (iii) holders of general unsecured claims which received on the effective date of the Plan a distribution under the Plan of 10% or more of the common stock of reorganized Delphi issued pursuant to the Plan with respect to such shares of common stock of reorganized Delphi issued pursuant to the Plan.

 

As part of these registration rights, we have agreed, as soon as practicable, and in any event no later than seven days, after the effective date of the Plan, to prepare and file with the SEC a shelf registration statement registering resales of those shares by the Investors and GM, and, in addition, the Investors and GM will have certain rights, as described under “Certain Relationships and Related Transactions — Registration Rights Agreement” below, to require us to file registration statements covering the resale of those shares or to include them in registration statements that we may file for ourselves or other stockholders. In addition, under the Plan, holders of general unsecured claims which received a distribution under the Plan of 10% or more of the common stock of reorganized Delphi will be granted, in the aggregate, one demand right to require us to file a registration statement covering the resale of their shares of common stock issued pursuant to the Plan. Following their registration and resale under the applicable registration statement, those shares of our capital stock would be freely tradable unless acquired by an affiliate of ours. By exercising their registration rights and selling a large number of shares, the Investors, GM and such 10% holders could cause the price of the common stock of reorganized Delphi to decline.

 

In general, under Rule 144 under the Securities Act, a person, or persons whose shares are aggregated, who is not (and has not been for at least three months prior to the date of sale) our affiliate and owns shares that were purchased from us, or any affiliate, at least six months previously, is entitled to resell their restricted shares without limitation, subject to the availability of current public information about us if such shares have been held for longer than six months and less than one year. Under Rule 144, a person that is our affiliate, and has held its restricted shares for at least six months, is entitled to resell, within any three-month period, a number of shares that does not exceed the greater of 1% of our then-outstanding shares of common stock or the average weekly trading volume of our common stock calculated in accordance with Rule 144, subject to manner of sale provisions, notice requirements and the availability of current public information about us. We are unable to estimate the number of shares that will be sold under Rule 144 under the Securities Act since this will depend on the market price for our common stock, the personal circumstances of the stockholder and other factors.

 

The number of outstanding shares of reorganized Delphi common stock set forth above assumes that the aggregate amount of all Trade and Other Unsecured Claims that are allowed or estimated for distribution purposes by the Bankruptcy Court total approximately $1.31 billion and are satisfied with 17,237,418 shares of common stock of reorganized Delphi, and are further estimated based on our assumptions regarding, among other things, allowed accrued post-petition interest.

 

Our ability to utilize our net operating loss carryovers and other tax attributes may be limited.

 

We have significant net operating loss carryovers (“NOLs”) and other United States federal income tax attributes. Section 382 of the Internal Revenue Code of 1986, as amended, limits a corporation’s ability to utilize NOLs and other tax attributes following a Section 382 ownership change. We expect that we will undergo a Section 382 ownership change upon the implementation of the Plan and, consequently, our ability to utilize our NOLs and other tax attributes may be limited. However, certain special rules applicable to ownership changes that occur in bankruptcy may be available to limit the consequences of such an ownership change. If we were to undergo a Section 382 ownership change prior to or after implementation of the Plan, our NOLs and other tax attributes may be limited to a greater extent or in some cases eliminated. While we believe that we have not undergone any Section 382 ownership change to date, we cannot give you any assurance that we will not undergo a Section 382 ownership change prior to or after implementation of the Plan.

 

The issuance of additional preferred stock or additional common stock may adversely affect holders of common stock of reorganized Delphi.

 

The Board of Directors of reorganized Delphi will have the authority, without any further vote or action by our common stockholders, to issue up to 75 million shares of preferred stock of reorganized Delphi and to determine the terms, including voting and conversion rights, of those shares and to issue up to 250 million shares of common stock of reorganized Delphi (including the shares issuable upon conversion of the Senior Convertible Preferred Stock and the shares issuable upon exercise of the Warrants). The voting and other rights of the holders of the common stock of reorganized Delphi will be subject to, and may be adversely affected by, the rights of the holders of Series A-1 Senior Convertible Preferred Stock and any other preferred stock that may be issued in the future. Similarly, subject to the limitations imposed by the rules of any stock exchange or quotation system on which our common stock may be listed or quoted, the Board of Directors of reorganized Delphi may issue additional shares of common stock without any further vote or action by our common stockholders, which would have the effect of diluting common stockholders. An issuance could occur in the context of another public or private offering of shares of common stock or preferred stock or in a situation in which the common stock or preferred stock is used to acquire the assets or stock of another company. The issuance of common stock or preferred stock, while providing desirable flexibility in connection with possible acquisitions, investments and other corporate purposes, could have the effect of delaying, deferring or preventing a change in control.

 

Certain of the Investors will beneficially own a large percentage of our voting stock and could be able to significantly influence our business and affairs.

 

On the effective date of the Plan, following the cancellation of all existing shares of our common stock and all of our other existing equity securities outstanding prior to the effective date of the Plan and following the funding of the Investors’ equity commitments, each of ADAH, Del-Auto, Merrill, UBS, Goldman and Pardus and their respective affiliates would beneficially own either (1) assuming the original rights holders exercise all of their rights in the rights offerings and each Investor purchases no shares of common stock pursuant to its backstop commitment in the discount rights offering, a total of 14,438,623, 5,031,776, 1,607,481, 1,612,167, 3,452,693 and 8,041,408 shares, respectively, or 10.7%, 3.7%, 1.2%, 1.2%, 2.6% and 6.0%, respectively, of the outstanding common stock of reorganized Delphi, or (2) assuming rights holders (other than the Plan Investors and their affiliates) exercise no rights in the rights offerings and each Investor purchases the full amount of its backstop commitment in the discount rights offering, a total of 16,829,014, 10,150,735, 2,013,967, 2,018,653, 10,894,441 and 12,835,849 shares, respectively, or 12.5%, 7.5%, 1.5%, 1.5%, 8.1% and 9.5%, respectively, of the outstanding common stock of reorganized Delphi, in each case assuming (i) conversion of all of the Investors’ shares of Senior Convertible Preferred Stock and taking into account shares of common stock of reorganized Delphi received by

certain Investors and their affiliates in their capacity as stockholders and creditors of Delphi pursuant to the Plan (including any shares received pursuant to the exercise by the Investors of discount rights in the discount rights offering), (ii) no exercise of par rights, (iii) no exercise of Warrants, (iv) 17,237,418 shares of common stock of reorganized Delphi are issued to creditors in respect of their Trade and Other Unsecured Claims in an aggregate amount of approximately $1.31 billion and (v) 16,508,176 shares of Series C Convertible Preferred Stock are issued to GM (and are converted into shares of common stock of reorganized Delphi, initially on a one-for-one basis). References to the number of shares and percentage ownership are further estimated based on our assumptions regarding, among other things, allowed accrued post-petition interest. Assumptions made with respect to the exercise of rights and warrants and the conversion of convertible securities for the purposes of this paragraph differ from the assumptions used elsewhere in this prospectus in stating the maximum number of shares of reorganized Delphi common stock outstanding on, or as promptly as practicable after, the effective date of the Plan and from those set forth under “Unaudited Pro Forma Condensed Consolidated Financial Information.” The Investors have the ability under the EPCA, prior to the date that the registration statement of which this prospectus forms a part is declared effective under the Securities Act, to arrange for a limited number of additional investors to whom the Investors may sell, in accordance with the EPCA and applicable securities laws, any shares of common stock of reorganized Delphi that they purchase pursuant to the Plan and the EPCA. Some of the Investors have informed us that they have arranged or intend to arrange for such sales to additional investors. The amount and percentage of shares to be owned by the Investors gives effect to the expected sale of shares of common stock of reorganized Delphi to such additional investors. For the number of shares that each Investor has informed us that it expects to sell to such additional investors, see “Effects of the Rights Offering on the Investors’ and GM’s Ownership.” Such sales to additional investors may be made by the Investors directly to such additional investors, or may be made by Delphi directly to such additional investors, and may substantially decrease the Investors’ ownership percentage in reorganized Delphi. The additional investors will have the rights of the Investors from whom they purchase common stock of reorganized Delphi under the registration rights agreement. See “Certain Relationships and Related Transactions — Registration Rights Agreement.” There can be no assurance that any of the Investors would actively participate in any trading market for the common stock of reorganized Delphi that may develop. Consequently, it is possible that there would be limited liquidity for the shares of common stock of reorganized Delphi, even if such shares are listed on any securities exchange or traded on the Pink Sheets. See “Use of Proceeds,” “Capitalization” and “Effects of the Rights Offerings on the Investors’ Ownership.”

 

In addition, holders of Series A-1 Senior Convertible Preferred Stock will have board representation rights and veto rights over some corporate actions that we may desire to take. See “— Holders of our Series A-1 Senior Convertible Preferred Stock have voting rights that may restrict our ability to take corporate actions,” “— The new directors of reorganized Delphi after the effective date of the Plan may change our current long-range plan,” “Board of Directors” and “Description of Capital Stock — Preferred Stock.”

 

Because of the foregoing, certain of the Investors could have significant influence over our management and policies, including the composition of the Board of Directors of reorganized Delphi, any amendments to our amended and restated certificate of incorporation and mergers or sales of all or substantially all of our assets, and any other matters requiring a stockholder vote.

 

The new directors of reorganized Delphi after the effective date of the Plan may change our current long-range plan.

 

After the effective date of the Plan, reorganized Delphi will have a new Board of Directors. The initial Board of Directors of reorganized Delphi will consist of nine directors to be selected as follows:

 

 

Board of Directors and will be elected by the holders of the common stock, the Series B Senior Convertible Preferred Stock and the Series A-2 Senior Convertible Preferred Stock;

 

 

 

 

All such appointments will be made no later than the effective date of the Plan. After the effective date of the Plan, the new Board of Directors of reorganized Delphi may make changes, which could be material, to our business, operations and current long-range plan described in this prospectus. It is impossible to predict what these changes will be and the impact they will have on our future results of operations and market price of the common stock of reorganized Delphi. See “Board of Directors.”

 

This prospectus, including the information incorporated by reference in this prospectus, as well as other statements made by us may contain forward-looking statements that reflect, when made, our current views with respect to current events and financial performance. Such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to our operations and business environment which may cause our actual results to be materially different from any future results, express or implied, by such forward-looking statements.

 

In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology. Factors, including the risks discussed under the “Risk Factors” sections beginning on page 35 of this prospectus and in our Annual Report on Form 10-K for the year ended December 31, 2007, which has been incorporated by reference into this prospectus, that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Although we believe the expectations reflected in the forward-looking statements at the time they are made are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We are under no duty to update any of these forward-looking statements after the date of this prospectus to conform our prior statements to actual results or revised expectations.

 

In connection with the Plan, we were required to submit projected financial information to demonstrate to the Bankruptcy Court the feasibility of the Plan and our ability to continue operations upon emergence from bankruptcy. The projections are not part of this prospectus and should not be relied on in connection with the exercise of rights in the rights offerings. The projections were not prepared for the purpose of the rights offerings or any offering of the common stock of reorganized Delphi and may not be updated on an ongoing basis. The projections reflect numerous assumptions concerning our anticipated future performance and prevailing and anticipated market and economic conditions at the time they were prepared that were and continue to be beyond our control and that may not materialize. Projections are inherently subject to uncertainties and to a wide variety of significant business, economic and competitive risks, including those risks discussed in the “Risk Factors” section beginning on page 35 of this prospectus and in our Annual Report on Form 10-K for the year ended December 31, 2007. Our actual results will vary from those contemplated by the projections and the variations may be material. As a result, you should not rely upon the projections in deciding whether to invest in the common stock of reorganized Delphi.

 

Our total gross proceeds from the rights offerings (assuming that all par rights are exercised) will be up to approximately $2.9 billion before deducting fees, including the Investors’ backstop commitment fee, and expenses related to the rights offerings. We intend to use the net proceeds from the rights offerings and the $975 million from the additional equity investments in reorganized Delphi by the Investors, together with borrowings under our currently anticipated $6.1 billion of exit financing (see “Description of Proposed Exit Financing” for a description of the exit financing we are currently seeking), excluding issuance costs, original issuance discount (“OID”) and fair value adjustments, to make payments and distributions contemplated by the Plan and for general corporate purposes. There can be no assurances that such exit financing will be obtained or such other conditions will be satisfied, and we cannot assure you that the Plan will become effective on the terms described in this prospectus, or at all.

 

We will receive gross proceeds of up to approximately $1.6 billion from the sale of shares of common stock of reorganized Delphi in connection with the discount rights offering before deducting fees, including the Investors’ backstop commitment fee, and expenses related to the discount rights offering, regardless of the number of discount rights exercised, as a result of the backstop commitment of the Investors. The proceeds from the discount rights offering will be used to make payments and distributions contemplated by the Plan for general corporate purposes. If any shares of common stock of reorganized Delphi are purchased pursuant to the exercise of the oversubscription privilege in the discount rights offering, we will receive additional gross proceeds of $0.25 per share of common stock purchased pursuant to the oversubscription privilege, which additional proceeds will be distributed pro rata to Eligible Holders that did not exercise or transfer any of their discount rights in the discount rights offering based on the ultimate allowed amount of each such holder’s Eligible Claim.

 

We will receive gross proceeds of up to approximately $1.3 billion from the sale of shares of common stock of reorganized Delphi in connection with the par rights offering (assuming that all par rights are exercised) before deducting fees and expenses related to the par rights offering. The backstop commitment of the Investors does not apply to the par rights offering. If fewer than all of the par rights are exercised in the par rights offering, the shares of common stock of reorganized Delphi offered in the par rights offering that are not purchased pursuant to the exercise of par rights will be issued to certain of our creditors in partial satisfaction of certain of their claims (or, in the case of GM, as shares of Series C Convertible Preferred Stock issued to GM under the Plan). The net proceeds from the par rights offering will be used to satisfy certain liquidity requirements, to satisfy certain claims of our unions, to reduce the amount of preferred stock distributed to GM and to partially satisfy certain claims of certain unsecured creditors as described below.

 

Of the shares of common stock being offered in the par rights offering, 7,421,644 shares consist of shares otherwise distributable to the following groups of holders of Eligible Claims in the following amounts (in each case at $59.61 per full share): (i) 648,745 shares otherwise distributable to Appaloosa, (ii) all of the shares otherwise distributable to certain of our unions (the “contributing unions”) based on such unions’ allowed claims, and (iii) the balance being an amount of shares otherwise distributable to certain of our unsecured creditors (the “contributing creditors”).

 

Proceeds, if any, generated by the par rights offering will be allocated in the following order:

 

 

 

 

contributing creditors as described in the preceding paragraph, which distribution of proceeds will decrease the number of shares of common stock of reorganized Delphi otherwise distributable to Appaloosa and the contributing creditors pursuant to the Plan.

 

If fewer than all of the par rights are exercised in the par rights offering, the shares of common stock of reorganized Delphi offered in the par rights offering that are not purchased pursuant to the exercise of par rights will be distributed to certain of our creditors in partial satisfaction of their claims (or, in the case of GM, as shares of Series C Convertible Preferred Stock issued to GM under the Plan).

 

We will receive total gross proceeds of up to approximately $1.0 billion from the exercise of the six-month warrants (assuming that all six-month warrants are exercised), before deducting fees and expenses related to the issuance of the warrants and the warrant shares. The net proceeds from the exercise of warrants will be allocated in the following order: (i) first, to redeem any of the 16,508,176 shares of Series C Convertible Preferred Stock issued to GM pursuant to the Plan, at a redemption price of $65.00 per share, (ii) second, to the extent any net proceeds remain, to redeem any of the up to $825 million of second-lien notes issued to GM pursuant to the Plan, at a redemption price of par plus accrued and unpaid interest, and (iii) third, to the extent any net proceeds remain, by reorganized Delphi for general corporate purposes.

 

The following table sets forth the estimated sources and uses of funds in connection with the rights offerings and the Plan, as if the effective date of the Plan was December 31, 2007 and assumes we raise exit financing on the terms set forth in “Description of Proposed Exit Financing” (dollars in millions):

Sources of Funds
First-lien exit financing		$	1,700
Discount rights offering(1)			1,575
Par rights offering gross proceeds(2)			—
Warrant offering gross proceeds(3)			—
Sale of Senior Convertible Preferred Stock and Common Stock under EPCA(4):
Series A Senior Convertible Preferred Stock			400
Series B Senior Convertible Preferred Stock			400
Common Stock			175
Net cash received from GM(5)			606
Total sources		$	4,856

Uses of Funds
Repayment of DIP First Priority Term Loan		$	250
Repayment of DIP Second Priority Term Loan			2,496
Payment to settle pre-petition claims to GM			175
Fund pre-petition pension obligation			1,252
Payment of administrative bankruptcy claims and other costs			308
Payment of exit financing issuance costs and OID			231
Payment of bankruptcy-related professional fees			60
Working capital			75
Pay accrued interest on DIP financing			9
Total uses		$	4,856

 

 

 

 

 

 

 

On September 8, 2005, our Board of Directors announced the elimination of the quarterly dividend on our common stock.

 

We anticipate that our exit financing will include negative covenants, similar to those currently contained in our debtor-in-possession financing, that will restrict or condition our payment of dividends. Because of these limitations, we do not expect to pay dividends on the common stock of reorganized Delphi so long as our exit financing is in effect. See “Description of Proposed Exit Financing.” In addition, the Senior Convertible Preferred Stock will rank senior to the common stock with respect to the payment of dividends. As a result, reorganized Delphi may not pay dividends on shares of its common stock unless all accrued and unpaid dividends on shares of the Senior Convertible Preferred Stock have been paid in full.

 

Our outstanding common stock was traded through the New York Stock Exchange under the symbol “DPH” until such stock was delisted by New York Stock Exchange effective October 11, 2005. This action followed the announcement by the New York Stock Exchange on October 10, 2005, that it was reviewing our continued listing status in light of our announcements involving the filing of voluntary petitions for reorganization relief under chapter 11 of the Bankruptcy Code. The New York Stock Exchange subsequently determined to suspend trading based on the trading price for our common stock, which closed at $0.33 on October 10, 2005, and completed delisting procedures effective October 11, 2005.

 

Our common stock is quoted on the Pink Sheets, a quotation service for OTC securities, under the symbol “DPHIQ.” Pink Sheets is a centralized quotation service that collects and publishes market maker quotes for OTC securities in real-time. Our listing status on the Pink Sheets is dependent on market makers’ willingness to provide the service of accepting trades to buyers and sellers of the stock. Quotes for OTC securities reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. Unlike securities traded on a stock exchange, such as the New York Stock Exchange, issuers of securities traded on the Pink Sheets do not have to meet any specific quantitative and qualitative listing and maintenance standards.

 

The following table sets forth the high and low sales price per share of our common stock, as reported by the New York Stock Exchange, for the periods through October 10, 2005, and thereafter the high and low OTC bid information:

 

 

 

 

The transfer agent and registrar for our common stock is Computershare Trust Company, N.A. On January 17, 2008, the record date for the rights offering, there were 277,605 holders of record of our common stock, and

563,477,461 shares of our common stock outstanding. On March 7, 2008, the closing price of our common stock on the Pink Sheets was $0.16 per share.

 

We intend to apply to list the common stock of reorganized Delphi on the New York Stock Exchange or, if approved by ADAH, the Nasdaq Global Select Market, if and when we meet the respective listing requirements. There can be no assurances, however, that we will meet the respective listing requirements on the effective date of the Plan or at any time thereafter. Therefore, the shares of common stock of reorganized Delphi may not be listed or quoted on the New York Stock Exchange, the Nasdaq Global Select Market or any other securities exchange or quotation system at the time they are issued on or as soon as practicable after the effective date of the Plan. Although we have an obligation under the EPCA to use our commercially reasonable efforts to list the shares of common stock of reorganized Delphi on the New York Stock Exchange or, if approved by ADAH, the Nasdaq Global Select Market, we cannot assure you that the common stock of reorganized Delphi will ever be listed on the New York Stock Exchange, the Nasdaq Global Select Market or any other securities exchange or quotation system.

 

If we are not able to list or have quoted the common stock of reorganized Delphi on the New York Stock Exchange, the Nasdaq Global Select Market or any other securities exchange or quotation system, we intend to cooperate with any registered broker-dealer who may seek to initiate price quotations for the common stock of reorganized Delphi on the OTC Bulletin Board. Trading on the OTC Bulletin Board is dependent on a broker-dealer being willing to make a market in the common stock of reorganized Delphi, which we cannot predict will be initiated or, if initiated, will continue. Other than furnishing to registered broker-dealers copies of this prospectus and documents filed as exhibits to the registration statement of which this prospectus forms a part, we will have no control over the process of quotation initiation on the OTC Bulletin Board. Even if an active market does develop for the common stock of reorganized Delphi, we can give no assurance as to how long it will continue, the liquidity of the market or at what price the common stock of reorganized Delphi will trade.

 

The rights will not be listed on any securities exchange or quoted on any automated quotation system. We intend, however, to cooperate with any registered broker-dealer who may seek to initiate price quotations for the discount rights on the OTC Bulletin Board. Trading on the OTC Bulletin Board is dependent on a broker-dealer being willing to make a market in the discount rights, which we cannot predict will be initiated or, if initiated, will continue. Other than furnishing to registered broker-dealers copies of this prospectus and documents filed as exhibits to the registration statement of which this prospectus forms a part, we will have no control over the process of quotation initiation on the OTC Bulletin Board. We can give no assurance that a market for the discount rights will develop or, if a market does develop, as to how long it will continue, the liquidity of the market or at what price the discount rights will trade. Because the par rights are not transferable, there will be no trading market for the par rights.

 

The table on the following page sets forth our cash and cash equivalents, long-term debt and capitalization as of December 31, 2007. Our capitalization is presented on a historical basis and on an as adjusted basis to reflect the rights offerings and other transactions contemplated by the Plan, as if they occurred on December 31, 2007, including:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References to the number of shares are further estimated based on our assumptions regarding, among other things, the ultimate amount of unsecured claims, cure amounts and allowed accrued post-petition interest.

 

This table should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and Notes thereto from our Annual Report on Form 10-K for the year ended December 31, 2007 incorporated by reference in this prospectus, and the pro forma financial information set forth under “Unaudited Pro Forma Condensed Consolidated Financial Information” included elsewhere in this prospectus.

 

 

 

 

 

 

The following unaudited pro forma condensed consolidated financial information (the “Pro Forma Financial Information”) sets forth selected historical consolidated financial information for Delphi and its consolidated subsidiaries. The historical data provided as of and for the year ended December 31, 2007 are derived from Delphi’s audited consolidated financial statements which have been incorporated by reference into this prospectus.

 

The Pro Forma Financial Information is provided for informational and illustrative purposes only. These tables should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the consolidated financial statements and related notes in the annual report on Form 10-K for the year ended December 31, 2007 which have been incorporated by reference into this prospectus. In addition, the historical financial statements of Delphi will not be comparable to the financial statements of reorganized Delphi following emergence from bankruptcy due to the effects of the consummation of the Plan as well as adjustments for fresh-start accounting.

 

The Pro Forma Financial Information gives effect to the following categories of adjustments as if such transactions had occurred on January 1, 2007 for the unaudited pro forma condensed consolidated statement of operations, and on December 31, 2007 for the unaudited pro forma condensed consolidated balance sheet. Each of these adjustments is described more fully below and within the notes of the Pro Forma Financial Information:

 

 

 

The Pro Forma Financial Information does not purport to represent what reorganized Delphi’s actual results of operations or financial position would have been had the Plan become effective or had the other transactions described above occurred on January 1, 2007 or December 31, 2007, as the case may be. In addition, the dollar amount of new equity and stockholders’ equity on the unaudited pro forma condensed consolidated balance sheet is not an estimate of the market value of the common stock of reorganized Delphi or any other shares of capital stock of reorganized Delphi as of the effective date of the Plan or at any other time. We make no representations as to the market value, if any, of the common stock of reorganized Delphi or of any other shares of capital stock of reorganized Delphi.

 

Reorganization Adjustments

 

The “Reorganization Adjustments” column in the Pro Forma Financial Information gives effect to the effectiveness of the Plan and the implementation of the transactions contemplated by the Plan, including the discharge of administrative claims and of estimated claims allowed by the Bankruptcy Court upon confirmation, our recapitalization upon emergence from reorganization under chapter 11 of the Bankruptcy Code, and the funding of certain pension liabilities. Estimates of claims for purposes of the Pro Forma Financial Information differ from the estimation of Eligible Claims for purposes of the discount rights offering. These adjustments include:

 

 

 

 

 

The Pro Forma Financial Information does not give effect to the exercise of the par rights or the Warrants as their exercise is not deemed probable because their value and ultimate exercise is dependent on future market performance which cannot be estimated. The Pro Forma Financial Information does give effect to the exercise of the discount rights because the Investors have agreed to backstop the discount rights offering by purchasing any shares offered pursuant to the discount rights offering but for which rights are not exercised. In addition, the estimated gain of $4.4 billion resulting from the settlement of liabilities, primarily postretirement obligations other than pensions, pursuant to the Plan has not been reflected in our “Reorganization Adjustments” for the unaudited pro forma condensed consolidated statement of operations as this gain is non-recurring.

 

For additional information regarding the “Reorganization Adjustments,” see the notes to the Pro Forma Financial Information.

 

Fresh-Start Adjustments

 

The “Fresh-Start Adjustments” column of the Pro Forma Financial Information gives effect to fresh-start accounting adjustments, in accordance with SOP 90-7. Our reorganization value, which represents our best estimate of fair value and approximates the amount a willing buyer would pay for our company immediately after the reorganization, will be allocated to the fair value of assets in conformity with Statement of Financial Accounting Standards No. 141, “Business Combinations” (“SFAS 141”). The Fresh-Start Adjustments are based on management’s current best estimate of the equity value of reorganized Delphi of $8.3 billion (including the current fair value of the Warrants based on the Black-Scholes valuation model) before adjusting for fees to and expenses of the Investors that we are required to pay pursuant to the EPCA of approximately $78 million. Under SOP 90-7, reorganization value is generally allocated first to tangible assets and identifiable intangible assets, and lastly to excess reorganization value (i.e., goodwill).

 

The asset valuations used in this prospectus represent current estimates based on data available as of December 31, 2007 and are made assuming an anticipated effective date of the Plan of March 31, 2008. However, there can be no assurance that the effective date of the Plan will be March 31, 2008, and updates to these valuations will be completed as of the actual effective date of the Plan based on the results of asset and liability valuations, as well as the related calculation of deferred taxes. The differences between the actual valuations and the current estimated valuations used in preparing the Pro Forma Financial Information will be reflected in our future balance sheets and may affect amounts, including depreciation and amortization expense, which we recognize in our statement of operations post-emergence. As such, the Pro Forma Financial Information may not accurately represent our post-emergence financial condition or results from operations, and any differences may be material.

 

We will realize certain non-recurring expenses following the effective date of the Plan related to certain asset fair value adjustments under fresh-start accounting that have been excluded from the Fresh-Start Adjustments to the unaudited pro forma condensed consolidated statement of operations. In particular, such expenses include increases to operating expenses for the estimated inventory fair value step-up adjustment of $84 million that will be expensed when the related inventory is subsequently sold and an estimated increase of $279 million that will be recognized immediately upon our emergence from bankruptcy related to acquired in-process research and development (“IPR&D”). These adjustments are reflected in the unaudited pro forma condensed consolidated balance sheet.

 

For additional information regarding the “Fresh-Start Adjustments,” see the notes to the Pro Forma Financial Information.

 

Historical Results

 

Our historical statement of operations for the year ended December 31, 2007 includes items for special termination benefits, restructurings, impairment charges, legal settlements and tax benefits as described below:

 

 

 

 

 

 

Master Restructuring Agreement and GM Settlement

 

The Pro Forma Financial Information also does not reflect any adjustments for the impact of the transactions contemplated by our Master Restructuring Agreement with GM or our Memoranda of Understanding with our various U.S. labor unions (to the extent the transactions contemplated by the Memoranda of Understanding were not realized in our historical results), which include headcount reductions, plant closures, wage and benefit reductions, subsidies and other support programs. These transactions are expected to significantly modify reorganized Delphi’s labor and cost structure and provide future operating benefits. These transactions are not included in the Pro Forma Financial Information as the benefits to be realized are based on future workforce composition and operating results, and any adjustments to our historical results utilizing these benefits would not be factually supportable. The benefits resulting from the 2006 and 2007 U.S. workforce transition programs, mainly due to reductions in headcount and changes in workforce composition, are reflected in the Pro Forma Financial Information to the extent they were realized in our historical results.

 

The unaudited pro forma condensed consolidated balance sheet includes the estimated cash settlement of certain post-petition payments of $606 million contemplated under the GM Settlement. The unaudited pro forma condensed consolidated statement of operations does not reflect the transactions contemplated by the GM Settlement as they are non-recurring.

 

DELPHI CORPORATION

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2007

 

 

Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations

 

Reorganization Adjustments

 

(a) We currently estimate stock compensation expense of $11 million and $14 million recorded in cost of sales and selling, general and administrative expenses (“SG&A”), respectively, related to restricted shares and options to be issued to management at emergence.

 

(b) The Plan contemplates substantial changes to our debt structure. The interest expense adjustments resulted in a net decrease of $189 million, and consists of the following (in millions):

 

 

The estimated net increase in annual interest expense of $158 million reflects increased interest costs on expected post emergence indebtedness related to borrowings to implement our Plan. For a description of the exit financing we are seeking, see “Description of Proposed Exit Financing” in this prospectus. The estimated interest expense assumes no outstanding balance on the revolving line of credit. The exit financing is expected to bear interest at the London Interbank Borrowing Rate (“LIBOR”), with a floor of 3.25%, plus a margin, as summarized below (dollars in millions):

 

 

As of March 7, 2008, LIBOR was approximately 3.0%, and accordingly we estimate that we will be required to use the LIBOR floor of 3.25%. We estimate our weighted average interest rate on our estimated exit financing post emergence to be approximately 10.2% (based on current LIBOR rates and excluding OID and fair value adjustment amortization) and our total outstanding indebtedness to be approximately $5.3 billion (face value, including foreign debt). A 1/8% increase or decrease in our expected weighted average interest rate, including from an increase in LIBOR (excluding the impact of the LIBOR floor), would increase or decrease interest expense on our exit financing by approximately $6 million annually. A condition under the EPCA is that pro forma interest expense (calculated in accordance with the provisions of the EPCA) during 2008 on our indebtedness will not exceed $585 million. However, there can be no assurances that we will obtain exit financing in the amounts or on the terms set forth above or under “Description of Proposed Exit Financing,” or at all.

 

In conjunction with our expected new borrowings, we currently estimate that we will incur approximately $457 million of debt issuance costs, OID and fair value adjustments on the exit financing. The debt issuance costs are classified as current or long-term assets, as appropriate. The OID and fair value adjustments associated with the exit financing are reflected as a reduction to the carrying value of the debt. The carrying value is accreted up to face value over the term of the debt. The table below details these amounts and the related annual amortization, which is recorded as interest expense (in millions):

 

 

The fair value adjustment arises from the first-lien (B) and second-lien term loans, which were issued at face value amounts in excess of the related fair value of the debt. The fair value adjustment reflects an 8% reduction from

the face value on the first-lien (B) term loan and an 8% reduction from the face value on the second-lien term loan. A 1% increase or decrease in the fair value adjustment and OID would increase or decrease the fair value adjustment and OID by approximately $28 million and $17 million, respectively, and annual interest expense by approximately $4 million and $2 million, respectively.

 

Offsetting these increases is the elimination of $411 million of interest expense recognized in the year ended December 31, 2007 on pre-petition debt and allowed unsecured claims.

 

(c) Reflects the elimination of loss on extinguishment of DIP financing as a result of the entry into the Refinanced DIP Credit Facility and termination of the Amended DIP credit facility and the Pre-petition Facility in the first quarter of 2007, and of the third amendment to the Refinanced DIP Credit Facility in the fourth quarter of 2007.

 

(d) Reflects the elimination of our bankruptcy-related reorganization items.

 

(e) Income tax benefit related to the Reorganization Adjustments is $2 million, based on applying the statutory tax rates to the Reorganization Adjustments by jurisdiction. The effective income tax rate results from tax affecting the Reorganization Adjustments in jurisdictions without a full valuation allowance at the respective statutory tax rates. Effective income tax rates were not impacted by Reorganization Adjustments at locations with a full valuation allowance, including the U.S.

 

(f) The Series A Senior Convertible Preferred Stock and the Series B Senior Convertible Preferred Stock issuable pursuant to the terms of the EPCA accrue dividends at 7.5% and 3.25% of the liquidation values, respectively. Therefore, for purposes of the Pro Forma Financial Information, these amounts are accrued as an increase in the net loss from continuing operations available to common stockholders. The Series C Convertible Preferred Stock issuable to GM does not accrue dividends. For a further discussion of the terms of the Convertible Preferred Stock, see “Description of Capital Stock” in this prospectus.

 

Fresh-Start Adjustments

 

(g) The decrease to post-retirement benefit and pension expense of approximately $252 million is related to the elimination of actuarial losses and the amortization of prior service costs associated with pensions and other post-retirement benefits recognized in the period (including the prior service cost component of curtailments). The adjustments of $244 million and $8 million decreased cost of sales and SG&A, respectively.

 

(h) The adjustment to depreciation and amortization expense of $440 million is comprised of the following (in millions):

 

 

Property, plant and equipment are recorded at fair value. We currently estimate that property, plant and equipment will be increased by approximately $554 million. We currently estimate that post-emergence annual depreciation expense will increase by approximately $118 million.

 

Intangible assets are recorded at fair value. We currently estimate that intangible assets will be increased by approximately $3.7 billion. Included in the fair value of intangible assets is $279 million of estimated fair value assigned to IPR&D, which will be immediately expensed following emergence. This one-time expense has been excluded from the pro forma adjustments for the unaudited pro forma condensed consolidated statement of operations because this amount is non-recurring. The adjustment to intangible assets other than IPR&D will result in an increase in annual amortization expense of approximately $322 million.

 

Existing goodwill of $397 million is eliminated and excess reorganization value of approximately $4.9 billion is recorded for amounts in excess of reorganization value allocable to identifiable tangible and intangible assets. There is no impact to the unaudited pro forma condensed consolidated statement of operations for the increase in goodwill since goodwill is not amortized, but rather is subject to annual impairment testing.

 

(i) There is no net impact on other income, net as the decrease in equity income is offset by the increase in minority interest (in millions):

 

 

Investments in non-consolidated affiliates are recorded at fair value. We currently estimate that investments in non-consolidated affiliates will be increased by approximately $147 million. We currently estimate that the impact of the annual decrease to equity income from this adjustment will be approximately $7 million related to depreciation and amortization of identifiable assets of the non-consolidated affiliate investments.

 

Minority interest reflects the results of ongoing operations within Delphi’s consolidated investments not 100% owned by us. We currently estimate that as a result of the Fresh-Start Adjustments, the impact of the annual increase in income reflected in minority interest will be approximately $7 million related to amortization of intangible assets of the consolidated investments.

 

(j) Income tax expense related to the fresh start adjustments included in the unaudited pro forma condensed consolidated statement of operations is $56 million. The effective income tax rate results from tax affecting the Fresh-Start Adjustments in jurisdictions without a full valuation allowance at the respective statutory tax rates. The effective income tax rate was not impacted by Fresh-Start Adjustments at locations with a full valuation allowance, including the U.S., except for the impact on the intraperiod tax allocation related to changes to other comprehensive income.

 

(k) For purposes of our basic and diluted pro forma loss per share calculations, we have assumed the following shares of common stock of reorganized Delphi will be outstanding:

 

 

We did not include any potentially issuable shares of common stock of reorganized Delphi, including shares issuable upon conversion of the Convertible Preferred Stock, upon exercise of the Warrants and upon exercise of stock options and restricted stock units, as they would have been anti-dilutive to the per share calculations.

 

DELPHI CORPORATION

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2007