When Appaloosa Management pulled out a $2.55 billion equity deal to support Delphi in its exit from Chapter 11 the reason given was that an increasing investment by GM (GM) would give the car company too much management over a company which is used to own. The entire Delphi financing package was for $6.1 billion. That would have let the auto parts company to exit bankruptcy and re-list on the NYSE.

Appaloosa’s comments about why it walked away were simply a dodge for avoiding comment on what a bad business Delphi is now.

Delphi is still losing a lot of money. With the US car industry getting into more trouble with each passing month, the auto parts company’s prospects also declining.

In the fourth quarter of 2007, Delphi lost $542 million on $5.3 billion in revenue. At the end of the year, the firm had $1 billion in cash and $1.2 billion in a debt facility. That is not much dry powder for company which could easily eat though that capital in a year.

There has been a great deal of talk about putting together a new package for getting Delphi back onto it feet and traded on the NYSE. That is not going to happen. It is not at all hard to imagine that the company’s revenue could fall well below the $22.3 billion it hit in 2007 and that its operating loss could grow.

Delphi’s future will be one of cutting more people, more plants, and seeking short-term capital with very high interest rates. That’s hardly what it looked liked just a few weeks ago.

Douglas A. McIntyre

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