A private equity group said Friday it has terminated its agreement to invest $2.55 billion in auto parts supplier Delphi Corp., which has been trying to emerge from bankruptcy protection.
The hedge fund Appaloosa Management LP made the announcement as Delphi, a major parts supplier to General Motors Corp., faced a Friday deadline to raise $6.1 billion in loans to help it out of bankruptcy.
Appaloosa said Delphi has breached an agreement it had with the investor group.
The Appaloosa-led investment was an essential pillar in Delphi's reorganization, which has been held up because of a tight credit market. The loss of the deal puts Delphi's plan to exit bankruptcy at risk.
GM depends heavily on a steady supply of parts from Delphi, which was its former parts subsidiary until a 1999 spin-off and remains the automaker's biggest supplier.
A message seeking comment was left Friday morning with GM spokeswoman Renee Rashid-Merem.
Appaloosa asserted Friday that it is now owed an $82.5 million fee, because Delphi breached their agreement by seeking an alternative transaction. It referred in its filing to Delphi's effort to take more loans from GM, a move that threatened the power of the investor group.