From Detroit Free Press

TROY, MI -- Delphi Corp. plans to begin official talks today with potential lenders seeking a $6.1 billion loan to help the auto supplier emerge from Chapter 11 bankruptcy protection.

The company has scheduled meetings with potential lenders in New York yesterday and in London today.

For the second time, Delphi has reduced the size of the loan it seeks. Last year, the company scaled back the amount by $2 billion to $6.8 billion. Because Delphi generated more cash than it had expected to in a business plan last fall, the company has reduced it again by $700 million to $6.1 billion.

The company has recruited J.P. Morgan Securities and Citigroup Global Markets to shop the loan to potential investors. The Troy, MI-based supplier is due in court Jan. 17 to seek a judge's approval of its reorganization plan, one of the final legal hurdles in its Chapter 11 case. Bankruptcy experts say that typically companies must have commitments for financing in place to win that approval.

Delphi, which filed for Chapter 11 in October 2001, has struggled to leave bankruptcy protection because it has had trouble securing this exit loan.

The company delayed its bankruptcy exit from the end of 2007 to the first three months of 2008 as it grapples with tightened credit markets. Defaults on home loans are putting pressure on the rest of the economy, making credit harder to obtain for borrowers of any size. Banks have become more conservative in their lending after losing billions in sub-prime mortgage investments.

Lenders also are cautious about investing in the auto industry as analysts predict another difficult year, with forecasts for U.S. sales potentially falling to a 10-year low.

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