Associated Press 07.09.07, 9:10 AM ET
Struggling auto parts maker Delphi Corp. said Monday it formally ended its agreement with private equity firm Cerberus Capital Management LP and other investors in the company's plan to exit bankruptcy protection.
In December, private equity firms including Cerberus, Appaloosa Management LP and Harbinger Capital Partners Master Fund I agreed to give Delphi (nyse: DPH - news - people ) up to $3.4 billion to emerge from bankruptcy.
Delphi warned in April that Cerberus may back out of the deal and has held discussions with a potential new lead investor, Highland Capital Management LP. On Monday, Delphi said it expects to enter into an agreement with new investors later this month. Delphi's board is scheduled to meet on July 16.
Delphi said the agreement's termination is not expected to prevent the company from filing its plan of reorganization on schedule. The company expects to approve a revised investment and reorganization framework in July 2007 and emerge from Chapter 11 reorganization by the end of the year.
The company also confirmed it is in the final stages of a comprehensive settlement agreement with General Motors Corp. (nyse: GM - news - people ) Delphi expects that a settlement with GM would be incorporated into the company's plan of reorganization rather than filed for separate approval. GM spun off Delphi as a separate company in 1999 and has some financial liability for the company's labor costs.
Delphi shares closed Friday at $2.54.