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-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OuHS1J3MgxdVtbxhBJVVoS+9vUDrvAv4P6LX/SLjHSlWTUs/4SGUazDIKKZL1Rer 2ktpnKmK+XbAIaY4HVzjPA== 0000950134-06-023659.txt : 20061222 0000950134-06-023659.hdr.sgml : 20061222 20061222170926 ACCESSION NUMBER: 0000950134-06-023659 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20061222 DATE AS OF CHANGE: 20061222 GROUP MEMBERS: HIGHLAND CREDIT STRATEGIES FUND GROUP MEMBERS: HIGHLAND MULTI-STRATEGY MASTER FUND LP GROUP MEMBERS: HIGHLAND MULTI-STRATEGY ONSHORE MASTER SUBFUND LLC GROUP MEMBERS: JAMES D DONDERO GROUP MEMBERS: STRAND ADVISORS INC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: DELPHI CORP CENTRAL INDEX KEY: 0001072342 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 383430473 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-56957 FILM NUMBER: 061297714 BUSINESS ADDRESS: STREET 1: 5725 DELPHI DRIVE CITY: TROY STATE: MI ZIP: 48098 BUSINESS PHONE: 248-813-2000 MAIL ADDRESS: STREET 1: 5725 DELPHI DRIVE CITY: TROY STATE: MI ZIP: 48098 FORMER COMPANY: FORMER CONFORMED NAME: DELPHI AUTOMOTIVE SYSTEMS CORP DATE OF NAME CHANGE: 19981020 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HIGHLAND CAPITAL MANAGEMENT LP CENTRAL INDEX KEY: 0001167365 IRS NUMBER: 752716725 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 13455 NOEL ROAD STE 1300 CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 9726284100 MAIL ADDRESS: STREET 1: 13455 NOEL ROAD STE 1300 CITY: DALLAS STATE: TX ZIP: 75240 SC 13D 1 d42307sc13d.htm SCHEDULE 13D sc13d


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. )*

Delphi Corporation

(Name of Issuer)

Common Stock, $0.01 par value per share

(Title of Class of Securities)

247126105

(CUSIP Number)

J. Kevin Ciavarra, Esq.
Highland Capital Management, L.P.
Two Galleria Tower
13455 Noel Road, Suite 800
Dallas, Texas 75240
(972) 628-4100

(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)

December 18, 2006

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. þ

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.


CUSIP No.		247126105		Page		2		of		17


1	NAMES OF REPORTING PERSONS: Highland Capital Management, L.P., a Delaware limited partnership

	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
	75-2716725

2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
	(a) o
	(b) o

3	SEC USE ONLY:



4	SOURCE OF FUNDS (SEE INSTRUCTIONS):

	AF

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e):

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION:

	Delaware

		7	SOLE VOTING POWER:

NUMBER OF			38,984,132

SHARES		8	SHARED VOTING POWER:
BENEFICIALLY
OWNED BY			5,272,783

EACH		9	SOLE DISPOSITIVE POWER:
REPORTING
PERSON			38,984,132

WITH		10	SHARED DISPOSITIVE POWER:

			5,272,783

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:

	44,256,915

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):

	7.9%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):

	PN, IA


CUSIP No.		247126105		Page		3		of		17


1	NAMES OF REPORTING PERSONS: Strand Advisors, Inc., a Delaware corporation

	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
	95-4440863

2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
	(a) o
	(b) o

3	SEC USE ONLY:



4	SOURCE OF FUNDS (SEE INSTRUCTIONS):

	AF

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e):

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION:

	Delaware

		7	SOLE VOTING POWER:

NUMBER OF			38,984,132

SHARES		8	SHARED VOTING POWER:
BENEFICIALLY
OWNED BY			5,272,783

EACH		9	SOLE DISPOSITIVE POWER:
REPORTING
PERSON			38,984,132

WITH		10	SHARED DISPOSITIVE POWER:

			5,272,783

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:

	44,256,915

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):

	7.9%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):

	CO


CUSIP No.		247126105		Page		4		of		17


1	NAMES OF REPORTING PERSONS: James D. Dondero

	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):


2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
	(a) o
	(b) o

3	SEC USE ONLY:



4	SOURCE OF FUNDS (SEE INSTRUCTIONS):

	AF, PF

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e):

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION:

	United States of America

		7	SOLE VOTING POWER:

NUMBER OF			44,078,632

SHARES		8	SHARED VOTING POWER:
BENEFICIALLY
OWNED BY			5,472,783

EACH		9	SOLE DISPOSITIVE POWER:
REPORTING
PERSON			44,078,632

WITH		10	SHARED DISPOSITIVE POWER:

			5,472,783

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:

	49,551,415

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):

	8.8%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):

	IN


CUSIP No.		247126105		Page		5		of		17


1	NAMES OF REPORTING PERSONS: Highland Credit Strategies Fund, a Delaware trust (1)

	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
	20-4948762

2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
	(a) o
	(b) þ

3	SEC USE ONLY:



4	SOURCE OF FUNDS (SEE INSTRUCTIONS):

	WC

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e):

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION:

	Delaware

		7	SOLE VOTING POWER:

NUMBER OF			0

SHARES		8	SHARED VOTING POWER:
BENEFICIALLY
OWNED BY			3,653,116

EACH		9	SOLE DISPOSITIVE POWER:
REPORTING
PERSON			0

WITH		10	SHARED DISPOSITIVE POWER:

			3,653,116

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:

	3,653,116

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):

	0.7%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):

	OO


(1)		The Reporting Persons may be deemed to be the beneficial owners of the shares of the Issuer’s Common Stock beneficially owned by the other Reporting Persons. However, Highland Credit Strategies Fund will not provide any financing or participate in the Proposal described in Item 4 hereto, so Highland Credit Strategies Fund expressly disclaims membership in a group with the other Reporting Persons with respect to the Proposal and other related matters described herein.


CUSIP No.		247126105		Page		6		of		17


1	NAMES OF REPORTING PERSONS: Highland Multi-Strategy Onshore Master SubFund, L.L.C., a Delaware limited liability company

	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
	20-5237162

2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
	(a) o
	(b) o

3	SEC USE ONLY:



4	SOURCE OF FUNDS (SEE INSTRUCTIONS):

	WC

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e):

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION:

	Delaware

		7	SOLE VOTING POWER:

NUMBER OF			0

SHARES		8	SHARED VOTING POWER:
BENEFICIALLY
OWNED BY			1,619,667

EACH		9	SOLE DISPOSITIVE POWER:
REPORTING
PERSON			0

WITH		10	SHARED DISPOSITIVE POWER:

			1,619,667

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:

	1,619,667

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):

	0.3%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):

	OO


CUSIP No.		247126105		Page		7		of		17


1	NAMES OF REPORTING PERSONS: Highland Multi-Strategy Master Fund, L.P., a Bermuda limited partnership

	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):


2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
	(a) o
	(b) o

3	SEC USE ONLY:



4	SOURCE OF FUNDS (SEE INSTRUCTIONS):

	WC

5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e):

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION:

	Bermuda

		7	SOLE VOTING POWER:

NUMBER OF			0

SHARES		8	SHARED VOTING POWER:
BENEFICIALLY
OWNED BY			1,619,667

EACH		9	SOLE DISPOSITIVE POWER:
REPORTING
PERSON			0

WITH		10	SHARED DISPOSITIVE POWER:

			1,619,667

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:

	1,619,667

12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):

	0.3%

14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):

	PN

TABLE OF CONTENTS


	Item 1. Security and Issuer
	Item 2. Identity and Background
	Item 3. Source and Amount of Funds or Other Consideration
	Item 4. Purpose of Transaction
	Item 5. Interest in Securities of the Issuer
	Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer
	Item 7. Material to be Filed as Exhibits
SIGNATURES
EXHIBITS
Letter from Highland Capital Management, L.P.
Joint Filing Agreement

Item 1. Security and Issuer.

This statement on Schedule 13D relates to the Common Stock, par value $0.01 per share (the “Common Stock”), of Delphi Corporation, a Delaware corporation (“Delphi” or the “Issuer”). The securities reported herein were previously reported on a Schedule 13G filed by the Reporting Persons (defined below) on December 4, 2006, as amended by Amendment Number 1 to such Schedule 13G filed on December 12, 2006 (collectively, the “Schedule 13G”). The principal executive offices of Delphi are located at 5725 Delphi Drive, Troy, Michigan 48098.

The information set forth in the Exhibits to this Schedule 13D is hereby expressly incorporated herein by reference, and the responses to each item of this Schedule 13D are qualified in their entirety by the provisions of such Exhibits. Unless otherwise indicated, all capitalized terms shall have the meanings ascribed to them in the Schedule 13G, and unless otherwise amended hereby, all information previously filed remains in effect.

Item 2. Identity and Background.

(a) This statement is filed by and on behalf of each of the following persons (collectively, the “Reporting Persons”): (i) Highland Capital Management L.P., a Delaware limited partnership (“Highland Capital”); (ii) Strand Advisors, Inc., a Delaware corporation (“Strand”); (iii) James D. Dondero; (iv) Highland Credit Strategies Fund, a Delaware trust (“HCF”); (v) Highland Multi-Strategy Onshore Master SubFund, L.L.C., a Delaware limited liability company (“SubFund”); and (vi) Highland Multi-Strategy Master Fund, L.P., a Bermuda limited partnership (“Master Fund”). Information is also given with respect to Highland Multi-Strategy Fund GP, L.P., a Delaware limited partnership (“Multi-Strategy GP”), and Highland Multi-Strategy Fund GP, L.L.C., a Delaware limited liability company (“Multi-Strategy GP LLC”). The directors and executive officers of Strand and SubFund are named on Appendix 1 hereto.

Each of the Reporting Persons declares that neither the filing of this statement nor anything herein shall be construed as an admission that such person is, for the purposes of Section 13(d) or 13(g) of the Act or any other purpose, the beneficial owner of any securities covered by this statement.

The proposal referenced in Item 4 to this Schedule 13D was made by Highland Capital and certain of its affiliates or other related entities as may be designated. Highland Capital has not determined if any of the Reporting Persons will provide the financing to support the Proposal, but it has been determined that HCF will not provide any of the financing. Therefore, the Reporting Persons expressly disclaim membership in a group with respect to the issuer or securities of the issuer for the purposes of Section 13(d) or 13(g) of the Act. Each of the Reporting Persons declares that neither the filing of this statement nor anything herein shall be construed as evidence that such person is, for the purposes of Section 13(d) or 13(g) of the Act or any other purpose, (i) acting (or has agreed or is agreeing to act together with any other person) as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, holding, or disposing of securities of the Issuer or otherwise with respect to the Issuer or any securities of the Issuer or (ii) a member of any group with respect to the Issuer or any securities of the Issuer.

(b) The address of the principal business office of each of the Reporting Persons is Two Galleria Tower, 13455 Noel Road, Suite 800, Dallas, Texas 75240.

(c) The principal business of Highland Capital, a registered investment adviser, is acting as investment adviser and/or manager to other persons, including HCF and Master Fund. Highland Capital may be deemed to beneficially own shares owned and/or held by and/or for the account of and/or for the benefit of other persons, including HCF, Master Fund and SubFund. The principal business of Strand is serving as the general partner of Highland Capital. Strand may be deemed to beneficially own shares owned and/or held by and/or for the account of and/or for the benefit of Highland Capital. The principal business of Mr. Dondero is serving as the President of

HCF and the President and a director of Strand. Mr. Dondero may be deemed to beneficially own shares owned and/or held by and/or for the account of and/or for the benefit of Strand. The principal business of HCF is to act as a registered investment company. The principal business of SubFund is purchasing, holding and selling securities for investment purposes. The principal business of Master Fund is serving as the managing member of SubFund. Master Fund may be deemed to beneficially own shares owned and/or held by and/or for the account of and/or for the benefit of SubFund.

(d) and (e) During the last five years, none of the Reporting Persons, nor, to the knowledge of the Reporting Persons, any of Multi-Strategy GP, Multi-Strategy GP LLC, the persons controlling the Reporting Persons, or the directors or executive officers of Strand and SubFund, has been convicted in a criminal proceeding or was a party to a civil proceeding, in either case of the type specified in Items 2(d) or (e) of Schedule 13D.


		(f)		Highland Capital Management, L.P. – Delaware
				Strand Advisors, Inc. – Delaware
				James Dondero – United States of America
				Highland Credit Strategies Fund – Delaware
				Highland Multi-Strategy Onshore Master SubFund, L.L.C. – Delaware
				Highland Multi-Strategy Master Fund, L.P. – Bermuda

Item 3. Source and Amount of Funds or Other Consideration.

The Reporting Persons have acquired an aggregate of 49,551,415 shares of Common Stock (the “Shares”), which are reported herein, in open market transactions for an aggregate purchase price of approximately $108,876,176.61 using a combination of funds from accounts managed by Highland Capital and Mr. Dondero’s personal funds to purchase the shares owned in his individual capacity.

Item 4. Purpose of Transaction.

The Reporting Persons acquired the Shares for investment purposes. However, on December 18, 2006, the Reporting Persons learned that Appaloosa Management L.P., Cerberus Capital Management, L.P., and Harbinger Capital Partners Master Fund I, Ltd., as well as Merrill Lynch & Co. and UBS Securities LLC made a proposal for an equity purchase and commitment agreement to invest up to $3.4 billion in preferred and common equity in the reorganized Delphi to support Delphi’s transformation plan announced on March 31, 2006 and its plan of reorganization framework agreement filed on December 18, 2006 (the “Appaloosa/Cerberus Proposal”). As a result, Highland Capital has re-evaluated its investment intent with respect to the securities reported herein and no longer holds the Common Stock for investment purposes only. Highland Capital will file its opposition to the Appaloosa/Cerberus Proposal with the United States Bankruptcy Court for the Southern District of New York on or before January 2, 2007. In addition, on behalf of itself, certain of its affiliates and related entities, Highland Capital made a proposal to the Board of Directors of Delphi on December 21, 2006. Such proposal is attached hereto as Exhibit 1 (the “Proposal”).

Equity Purchase and Rights Offering

The Proposal provides that Highland Capital will purchase up to $4.7 billion of new common stock, par value $0.01 per share (the “Common Stock”), of the reorganized Delphi to support the transformation plan Delphi announced on March 31, 2006 and a plan of reorganization supported by Highland Capital to be filed by the Company and confirmed in Delphi’s Chapter 11 Case No. 05-44481 (the “Plan”).

The Proposal also provides that Delphi must agree to conduct a Rights Offering (the “Rights Offering”) by offering and selling shares of its Common Stock to its existing stockholders on the terms and subject to the conditions set forth in an Equity Purchase and Commitment Agreement (the “New Equity Agreement”) to be entered into by Delphi and Highland Capital. Highland Capital also agreed to purchase any shares of Common

Stock that are unsubscribed in the Rights Offering up to $4.7 billion (the “Backstop”) and receive a fee in the amount of 2.5% of the Rights Offering (the “Backstop Fee”). Pursuant to the Proposal and subject to existing laws, all existing holders of at least 0.5% of the currently issued and outstanding shares of Common Stock of Delphi will be given the option to participate in the Backstop and earn their pro-rata share of the Backstop Fee. The Rights Offering will provide (i) that the existing stockholders will receive the right to acquire new common stock of the Company (the “Rights”) either as part of confirmation of a Plan or subject to the effectiveness of a registration statement to be filed with the Securities and Exchange Commission, (ii) that the Rights Offering be subject to prior approval of the Bankruptcy Court and satisfaction of certain other terms and conditions similar in scope to those set forth in the New Equity Agreement and (iii) that the Rights will entitle the eligible stockholders to purchase their pro rata share of the Common Stock at a discount to the anticipated business enterprise value of the reorganized Company and would be transferable by the original eligible Stockholders.

No preferred stock in the reorganized Delphi will be offered or purchased pursuant to the Proposal by Highland.

Plan of Reorganization Framework

The Proposal also provides that Highland Capital will enter into a Plan Framework Support Agreement (the “New Plan Agreement”), which will provide that (i) all senior secured debt will be refinanced and paid in full and all allowed administrative and priority claims will be paid in full; (ii) trade and other unsecured claims and unsecured funded debt claims will be reinstated pursuant to terms satisfactory to Highland Capital or be satisfied in full with cash; (iii) in exchange for GM’s financial contribution to Delphi’s transformation plan, and in satisfaction of GM’s claims against Delphi, GM will receive 7.0 million shares of Common Stock in the reorganized Delphi, $2.63 billion in cash, and an unconditional release of any alleged estate claims against GM; and (iv) all subordinated debt claims (“Preferred Holders”) will be satisfied in full with cash.

As a result of the Plan and the Rights Offering, holders of existing equity securities in Delphi will effectively receive 3.0 million out of a total of 135.3 million shares of Common Stock in the reorganized Delphi, at a deemed value of $45 per share, and rights to purchase approximately 125.3 million shares of Common Stock in the reorganized Delphi for $4.7 billion at a deemed exercise price of $37.23 per share (subject to the Rights Offering becoming effective and certain other conditions). In the event Highland Capital determines to reduce the Rights Offering to $4.2 billion, existing equity holders will receive rights to purchase approximately 115.3 million shares of common stock in the reorganized Delphi for $4.2 billion at a deemed exercise price of $36.56 per share.

Refinance of DIP Facility

Pursuant to the New Plan Agreement, Highland Capital will also support Delphi with its announced efforts to refinance successfully in full its existing $2.0 billion DIP facility and $2.5 billion prepetition revolver and term loan facilities with JPMorgan Chase Bank, N.A. and other lenders as announced by the Company on December 18, 2006.

Improved Corporate Governance Structure

Because there will be no preferred stock possessing veto rights in the reorganized Delphi and there will be no sale of control pursuant to the Proposal, the common equity holders will have corporate governance protection following the confirmation of the Plan. The executive management team as announced on December 18, 2006 will be left in place post-confirmation. Highland Capital will also accept the proposal that Delphi will be governed by a twelve (12) member Board of Directors, ten (10) of whom would be independent directors and two (2) of whom would be the new Executive Chairman and a new Chief Executive Officer and President.

However, with respect to the appointment of post-confirmation directors, a board selection panel of six members will be created to choose the members of the reorganized Delphi board (the “Panel”). The Panel will consist of Highland Capital and a maximum of two other significant stockholders of the reorganized Delphi, one representative from GM, one management representative, and one representative from the equity committee.

Pension Funding

Highland Capital will also support Delphi’s earlier commitment to preserve its salaried and hourly defined benefit U.S. pension plans and will include an arrangement to fund approximately $3.5 billion of its pension obligations.

This Schedule 13D is not a solicitation for or against votes on the Issuer’s plan of reorganization. No disclosure statement has been approved by the Bankruptcy Court for the Issuer’s plan of reorganization.

In addition to the Proposal discussed herein, the Reporting Persons may engage in communications with one or more stockholders, one or more statutory committees of the Issuer and any members thereof, and officers or directors of the Issuer, including discussions regarding the Proposal, the Plan, and the pending Appaloosa/Cerberus Proposal , along with the Issuer’s operations and strategic direction and ideas that, if effected, could result in, among other things: (a) the acquisition by the Reporting Persons of additional securities of the Issuer, or the disposition of securities of the Issuer; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries; (d) changes in the present board of directors or management of the Issuer; (e) a material change in the present capitalization or dividend policy of the Issuer; (f) any other material change in the Issuer’s business or corporate structure; (g) changes in the Issuer’s certificate of incorporation or bylaws or other actions which may impede the acquisition of control of the Issuer by any person; (h) causing any class of the Issuer’s securities to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) a class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended; or (j) any action similar to those enumerated above. Except to the extent that the foregoing may be deemed to be a plan or proposal, none of the Reporting Persons currently has any plans or proposals that relate to or would result in any of the actions specified in clause (a) through (j) of Item 4 of Schedule 13D. The Reporting Persons reserve the right, based on all relevant factors and subject to applicable law, at any time and from time to time, to review or reconsider their position, change their purpose, take other actions (including actions that could involve one or more of the types of transactions or have one or more of the results described in paragraphs (a) through (j) of Item 4 of Schedule 13D) or formulate and implement plans or proposals with respect to any of the foregoing.

Item 5. Interest in Securities of the Issuer.

(a) As of December 21, 2006, (i) Highland Capital may be deemed to beneficially own 44,256,915 shares of Common Stock, which represents approximately 7.9%^1,2 of the outstanding Common Stock; (ii) Strand may be deemed to beneficially own 44,256,915 shares of Common Stock, which represents approximately 7.9%^1,2 of the outstanding Common Stock; (iii) James D. Dondero may be deemed to beneficially own 49,551,415¹ shares of Common Stock, which represents approximately 8.8%¹ of the outstanding Common Stock; (iv) HCF may be


¹		This calculation is based on 561,781,590 shares of the Issuer’s Common Stock outstanding as of July 31, 2006, as disclosed in the Issuer’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2006.

²		Highland Capital and certain of its affiliates and related entities collectively hold approximately 8.8% of Issuer’s Common Stock.

deemed to beneficially own 3,653,116 shares of Common Stock, which represents approximately 0.7%¹ of the outstanding Common Stock; (v) SubFund may be deemed to beneficially own 1,619,667 shares of Common Stock, which represents approximately 0.3%¹ of the outstanding Common Stock; and (vi) Master Fund may be deemed to beneficially own 1,619,667 shares of Common Stock, which represents approximately 0.3%¹ of the outstanding Common Stock.

(b)


	Sole		Shared		Sole		Shared
	Voting		Voting		Dispositive		Dispositive
	Power		Power		Power		Power
Highland Capital Management, L.P.		38,984,132		5,272,783		38,984,132		5,272,783
Strand Advisors, Inc.		38,984,132		5,272,783		38,984,132		5,272,783
James D. Dondero		5,094,500		44,456,915		5,094,500		44,456,915
Highland Credit Strategies Fund		0		3,653,116		0		3,653,116
Highland Multi-Strategy Onshore Master SubFund, L.L.C.		0		1,619,667		0		1,619,667
Highland Multi-Strategy Master Fund, L.P.		0		1,619,667		0		1,619,667

(c) Except as set forth below, there have been no transactions in the Common Stock by any of the Reporting Persons during the past sixty days.

During the past sixty days, the Reporting Persons affected the following purchases of shares of Common Stock in open market transactions:


				Number of
Reporting Person	Date	Price		Shares
Highland Capital	10/19/2006		2.08		200,000
Highland Capital	10/19/2006		2.07		200,000
Highland Capital	10/19/2006		2.06		700,000
Highland Capital	10/20/2006		2.402		200,000
Highland Capital	10/20/2006		2.374		200,000
Highland Capital	10/20/2006		2.384		200,000
Highland Capital	10/23/2006		2.595		100,000
Highland Capital	10/23/2006		2.565		22,500
SubFund	10/25/2006		2.775		500,000
SubFund	10/25/2006		2.779		100,000
SubFund	10/26/2006		2.902		215,000
SubFund	10/26/2006		2.9		188,000
Highland Capital	10/26/2006		2.902		815,000
Highland Capital	10/26/2006		2.9		692,000
HCF	10/26/2006		2.902		270,000
HCF	10/26/2006		2.9		220,000
Highland Capital	10/27/2006		2.76		150,000
Highland Capital	10/27/2006		2.829		254,000
HCF	10/27/2006		2.76		50,000
HCF	10/27/2006		2.829		83,000


				Number of
Reporting Person	Date	Price		Shares
Highland Capital	10/30/2006		2.816		750,000
Highland Capital	10/30/2006		2.844		300,000
HCF	10/30/2006		2.816		250,000
HCF	10/30/2006		2.844		100,000
Highland Capital	11/2/2006		2.65		300,000
Highland Capital	11/2/2006		2.647		200,000
Highland Capital	11/8/2006		2.202		725,000
Highland Capital	11/8/2006		2.214		250,000
Highland Capital	11/8/2006		2.208		300,000
Highland Capital	11/8/2006		2.2		50,000
Highland Capital	11/9/2006		2.36		100,000
Highland Capital	11/9/2006		2.346		125,000
Highland Capital	11/13/2006		2.369		2,300,000
Highland Capital	11/13/2006		2.358		250,000
Highland Capital	11/13/2006		2.36		150,000
Highland Capital	11/14/2006		2.301		85,000
Highland Capital	11/14/2006		2.29		50,000
Highland Capital	11/14/2006		2.278		125,000
Highland Capital	11/14/2006		2.314		180,000
Highland Capital	11/14/2006		2.31		50,000
Highland Capital	11/14/2006		2.3		25,000
Highland Capital	11/15/2006		2.283		700,000
Highland Capital	11/15/2006		2.273		430,000
Highland Capital	11/16/2006		2.46		238,065
Highland Capital	11/16/2006		2.459		544,000
Highland Capital	11/16/2006		2.29		250,000
Highland Capital	11/17/2006		2.39		400,000
Highland Capital	11/17/2006		2.422		1,000,000
Highland Capital	11/17/2006		2.4		152,500
Highland Capital	11/20/2006		2.257		600,000
Highland Capital	11/20/2006		2.271		700,000
Highland Capital	11/21/2006		2.179		500,000
Highland Capital	11/21/2006		2.189		481,750
Highland Capital	11/22/2006		2.204		600,000
Highland Capital	11/22/2006		2.215		70,000
Highland Capital	11/27/2006		2.102		1,200,000
Highland Capital	11/27/2006		2.08		100,000
Highland Capital	11/28/2006		2.215		850,000
Highland Capital	11/29/2006		2.25		1,821,500
Highland Capital	11/29/2006		2.278		80,300
Highland Capital	12/4/2006		2.624		975,000
Highland Capital	12/4/2006		2.64		750,000
HCF	12/4/2006		2.624		325,000
HCF	12/4/2006		2.64		250,000
Highland Capital	12/5/2006		2.805		1,200,000
Highland Capital	12/5/2006		2.82		187,500
Highland Capital	12/5/2006		2.855		150,000


				Number of
Reporting Person	Date	Price		Shares
Highland Capital	12/5/2006		2.772		37,125
HCF	12/5/2006		2.805		400,000
HCF	12/5/2006		2.82		62,500
HCF	12/5/2006		2.855		50,000
HCF	12/5/2006		2.772		12,375
Highland Capital	12/6/2006		2.986		393,750
Highland Capital	12/6/2006		2.995		225,000
Highland Capital	12/6/2006		3		150,600
HCF	12/6/2006		2.986		131,250
HCF	12/6/2006		2.995		75,000
HCF	12/6/2006		3		50,200
Highland Capital	12/7/2006		2.999		157,500
Highland Capital	12/7/2006		3		693,750
Highland Capital	12/7/2006		2.995		187,500
HCF	12/7/2006		2.999		52,500
HCF	12/7/2006		3		231,250
HCF	12/7/2006		2.995		62,500
Highland Capital	12/8/2006		3.266		452,625
Highland Capital	12/8/2006		3.185		180,000
HCF	12/8/2006		3.266		150,875
HCF	12/8/2006		3.185		60,000
SubFund	12/12/2006		3.09		16,667
Highland Capital	12/12/2006		3.09		16,667
HCF	12/12/2006		3.09		16,666
Highland Capital	12/13/2006		3.252		4,000,000
SubFund	12/13/2006		3.252		600,000
Highland Capital	12/14/2006		3.255		125,000
Highland Capital	12/18/2006		2.713		1,000,000
Highland Capital	12/18/2006		2.739		833,333
Highland Capital	12/18/2006		2.593		1,000,000
Highland Capital	12/18/2006		2.621		916,667
HCF	12/18/2006		2.713		200,000
HCF	12/18/2006		2.739		166,667
HCF	12/18/2006		2.593		200,000
HCF	12/18/2006		2.621		183,333

(d) Not applicable.

(e) Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

On December 21, 2006, Highland Capital delivered the Proposal to the Issuer, a copy of which is attached hereto as Exhibit 2.

Other than as provided herein, there are no contracts, arrangements, understandings or relationships between the Reporting Persons or any other person with respect to the securities of the Issuer.

Item 7. Material to be Filed as Exhibits.


Exhibit 1		Letter from Highland Capital Management, L.P., dated December 21, 2006, to the Board of Directors of Delphi Corporation.

Exhibit 2		Joint Filing Agreement, by and among the Reporting Persons, dated as of December 21, 2006.

SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this Schedule 13D is true, complete and correct.

Date: December 22, 2006


Highland Credit Strategies Fund

By:	/s/ James Dondero

	Name: James Dondero
	Title: President

Highland Capital Management, L.P.

By:	Strand Advisors, Inc., its general partner

	By:	/s/ James Dondero

		Name: James Dondero
		Title: President

Strand Advisors, Inc.

By:	/s/ James Dondero

	Name: James Dondero
	Title: President

James Dondero

	/s/ James Dondero


Highland Multi-Strategy Onshore Master SubFund, L.L.C.

By:	Highland Multi-Strategy Master Fund, L.P., its
	managing member

By:	Highland Multi-Strategy Fund GP, L.P., its general
	partner

By:	Highland Multi-Strategy Fund GP, L.L.C., its general
	partner

By:	Highland Capital Management, L.P., its sole member

By:	Strand Advisors, Inc., its general partner

	By:	/s/ James Dondero

		Name: James Dondero
		Title: President

Highland Multi-Strategy Master Fund, L.P.

By:	Highland Multi-Strategy Fund GP, L.P., its general
	partner

By:	Highland Multi-Strategy Fund GP, L.L.C., its general
	partner

By:	Highland Capital Management, L.P., its sole member

By:	Strand Advisors, Inc., its general partner

	By:	/s/ James Dondero

		Name: James Dondero
		Title: President

EXHIBITS


Exhibit 1		Letter from Highland Capital Management, L.P., dated December 21, 2006, to the Board of Directors of Delphi Corporation.

Exhibit 2		Joint Filing Agreement, by and among the Reporting Persons, dated December 21, 2006.

APPENDIX 1

The name of each director and executive officer of Strand and SubFund is set forth below. The business address of each person listed below is Two Galleria Tower, 13455 Noel Road, Suite 1300, Dallas, Texas 75240. Each person identified below is a citizen of the United States of America. The present principal occupation or employment of each of the listed persons is set forth below. During the past five years, none of the individuals listed below has been convicted in a criminal proceeding or been a party to a civil proceeding, in either case of the type specified in Items 2(d) or (e) of Schedule 13D.


		Present Principal Occupation or Employment
Name		and Business Address (if applicable)
Strand Advisors, Inc.

James Dondero, Director		President
Mark Okada		Executive Vice President
Patrick H. Daugherty		Secretary
Todd A. Travers		Assistant Secretary
J. Kevin Ciavarra		Assistant Secretary
Michael Minces		Assistant Secretary
James Plohg		Assistant Secretary
Brian Lohrding		Treasurer

Highland Multi-Strategy Onshore Master SubFund, L.L.C.

James Dondero, Director		President
Mark Okada		Executive Vice President
Patrick H. Daugherty		Secretary
Todd A. Travers		Assistant Secretary
J. Kevin Ciavarra		Assistant Secretary
Michael Minces		Assistant Secretary
James Plohg		Assistant Secretary
Brian Lohrding		Treasurer

EX-99.(1) 2 d42307exv99wx1y.htm LETTER FROM HIGHLAND CAPITAL MANAGEMENT, L.P. exv99wx1y

EXHIBIT 1

December 21, 2006
Via Facsimile and Federal Express

Board of Directors
Delphi Corporation
5725 Delphi Drive
Troy, Michigan 48098

PROPOSAL AND COMMITMENT LETTER FOR UP TO
$4.7 BILLION COMMON EQUITY COMMITMENT

Gentlemen:

Highland Capital Management, L.P. (“Highland Capital”) is an SEC-registered investment adviser specializing in credit, alternative investing and equity investments. Highland Capital currently manages approximately $35 billion in leveraged loans, high yield bonds, structured products, distressed assets, equity investments and other assets for banks, insurance companies, pension plans, foundations, and endowments. Currently, certain of Highland Capital’s affiliates and related entities collectively are the second largest beneficial stockholder in Delphi Corporation (“Delphi”) with aggregate holdings of approximately 8.8% of the currently issued and outstanding common stock, par value $0.01 per share of Delphi. Highland Capital has reviewed the proposal (the “Appaloosa/Cerberus Proposal”) recently made by Appaloosa Management, L.P., Cerberus Capital Management, L.P., Harbinger Capital Partners Master Fund I, Ltd., Merrill Lynch & Co. and UBS Securities, LLC. (collectively, the “Appaloosa/Cerberus Group”) and supported by Delphi. Highland Capital believes that the Appaloosa/Cerberus Proposal is deficient and not in the best interests of Delphi and its various creditors, stockholders and other parties in interest, including, most importantly, its common stockholders for a number of reasons, including that the existing common stockholders would be significantly diluted and are not entitled to participate in the entire transaction.

Highland Capital, on behalf of itself, certain of its affiliates and related entities as may be designated² (collectively, “Highland” or the “Plan Investor”), submits this proposal and commitment (this “Commitment”) for a purchase of common equity to Delphi and certain of its United States subsidiaries and affiliates (collectively, the “Company” or “Debtors”) that are Chapter 11 Debtors in Possession in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). We believe this Commitment is superior to the Appaloosa/Cerberus Proposal. We believe this Commitment also provides an alternative that is in the best interests of the Company and its various creditors, stockholders and other parties in interest, including, most importantly, its common stockholders.

Pursuant to this Commitment, the Plan Investor will purchase up to $4.7 billion of new common stock, par value $0.01 per share (the “Common Stock”), of the reorganized Company to support the Company’s transformation plan announced on March 31, 2006 and a plan of reorganization supported by the Plan Investor to be filed by the Company and confirmed in the Company’s Chapter 11 Case No. 05-44481 (the “Plan”). Subject to the agreement of the Company to file and seek confirmation of the Plan,


²	This proposal and commitment is not being made by or on behalf of, among other entities, Highland Credit Strategies Fund.

the Plan Investor commits to enter into agreements on substantially the same terms and subject to the same applicable conditions as those set forth in the Equity Purchase and Commitment Agreement and the Plan Framework Support Agreement that were filed with the Bankruptcy Court on December 18, 2006, except as otherwise specified herein. Subject to the Company’s agreement to move forward with respect to this Commitment, the Plan Investor covenants and agrees to proceed along a similar path to plan confirmation as described in, and proposed by, the filings made with the Bankruptcy Court on December 18, 2006, relating to the Appaloosa/Cerberus Proposal.

SUPERIOR OFFER

This Commitment is clearly superior to the Appaloosa/Cerberus Proposal and is in the best interests of the Company and its creditors, stockholders and other parties in interest. This Commitment also maximizes the value of the Company and provides significant benefits to the Company and its various stakeholders by maintaining fairness to all the existing stakeholders in the Company, when compared to the Appaloosa/Cerberus Proposal. Some of the benefits of this Commitment include:

	•		The ability of the Board of Directors to submit a proposal to the Court that is consistent with its fiduciary duties to all of its stakeholders and one that should ensure the support of the equity committee in the chapter 11 cases;

	•		The ability of the Company to obtain $4.7 billion of capital without offering a “sweetheart” $1.2 billion preferred stock deal to the Appaloosa/Cerberus Group that significantly dilutes the existing stockholders and results in this new insider group taking control of the Company through its acquisition of almost 30% of the Company’s equity and its acquisition of veto rights;

	•		The ability to proceed with a rights offering that does not guarantee an allocation of equity (6.3 million shares) to a control group (i.e., the Appaloosa/Cerberus Group);

	•		The ability to endorse the management of the Company as announced on December 18, 2006, while at the same time ensuring that this management will report to an independent Board that is not subject to this proposed control group (i.e., the Appaloosa/Cerberus Group);

	•		A transaction that accepts the negotiated deal between the Company and General Motors Corporation (“GM”) and that should be equally supported by this stakeholder and the other statutory committees;

	•		A transaction that offers existing stockholders the ability to capture the economic value of the enterprise, rather than allowing the taking of this value by the Appaloosa/Cerberus Group; and

	•		A transaction that we believe will be embraced by the market because it supports and is reflective of the current value of the Company.

COMMITMENT

Subject to the preparation and execution of definitive documents reflecting this Commitment as detailed herein, the following would be the principal terms under which Highland will commit to the equity investment in the Company and to support the Plan:

- 2 -

Equity Purchase and Rights Offering

The Company will conduct a Rights Offering (the “Rights Offering”) by offering and selling shares of its Common Stock to its existing stockholders on the terms and subject to the conditions set forth in an Equity Purchase and Commitment Agreement (the “New Equity Agreement”) to be entered into by the Company and the Plan Investor similar in form and substance to the one agreed to with the Appaloosa/Cerberus Group, except as provided herein. The Plan Investor will purchase any shares of Common Stock that are unsubscribed in the Rights Offering up to $4.7 billion (the “Backstop”) and receive a fee in the amount of 2.5% of the Rights Offering (the “Backstop Fee”). Subject to compliance with all applicable laws, all existing holders of Common Stock (the “Stockholders”) holding a minimum of 0.5% of the currently issued and outstanding shares of Common Stock of the Company will be given the option to participate in the Backstop and earn their pro-rata share of the Backstop Fee. As more particularly to be set forth in the New Equity Agreement, the Rights Offering will provide (i) that the existing Stockholders will receive the right to acquire new common stock of the Company (the “Rights”) either as part of confirmation of a Plan or subject to the effectiveness of a registration statement to be filed with the Securities Exchange Commission, (ii) that the Rights Offering be subject to prior approval of the Bankruptcy Court and satisfaction of certain other terms and conditions similar in scope to those set forth in the Equity Agreement and (iii) that the Rights will entitle the eligible Stockholders to purchase their pro rata share of the Common Stock at a discount to the anticipated business enterprise value of the reorganized Company and would be transferable by the original eligible Stockholders. The Rights Offering may be reduced to $4.2 billion by the Plan Investor, subject to and on the terms specified herein.

No preferred stock in the reorganized Company will be offered or purchased pursuant to this Commitment by Highland.

Plan of Reorganization Framework

The Plan Investor will enter into a Plan Framework Support Agreement (the “New Plan Agreement”) similar to the Plan Framework Support Agreement entered into with the Appaloosa/Cerberus Group, except as provided herein. The New Plan Agreement will outline the Company’s proposed framework for the Plan and the treatment of claims and interests under the Plan will be as follows:

	•		All senior secured debt will be refinanced and paid in full and all allowed administrative and priority claims will be paid in full;

	•		Trade and other unsecured claims and unsecured funded debt claims will be reinstated pursuant to terms satisfactory to the Plan Investor or be satisfied in full with cash. The framework requires that the amount of allowed trade and unsecured claims (other than funded debt claims) not exceed $1.7 billion;

	•		As is the case in the Appaloosa/Cerberus Proposal, in exchange for GM’s financial contribution to the Company’s transformation plan, and in satisfaction of GM’s claims against the Company, GM will receive 7.0 million shares of Common Stock in the reorganized Company, $2.63 billion in cash, and an unconditional release of any alleged estate claims against GM. In addition, as with other customers, certain GM claims would flow-through the chapter 11 cases and be satisfied by the reorganized Company in the ordinary course of business. Any other terms relating to GM as outlined in the Company’s announcement dated December 18, 2006 will also be accepted by Highland; and

- 3 -

•

All subordinated debt claims (“Preferred Holders”) will be satisfied in full with cash. In the event the Plan Investor determines to reduce the Rights Offering to $4.2 billion, the claims of the Preferred Holders would be satisfied with $450 million of common stock (10.0 million out of a total of 135.3 million shares) in the reorganized Company, at a deemed value of $45 per share and the balance in cash.

As a result of the Plan and the Rights Offering, holders of existing equity securities in the Company will effectively receive 3.0 million out of a total of 135.3 million shares of Common Stock in the reorganized Company, at a deemed value of $45 per share, and rights to purchase approximately 125.3 million shares of Common Stock in the reorganized Company for $4.7 billion at a deemed exercise price of $37.23 per share (subject to the Rights Offering becoming effective and certain other conditions). In the event the Plan Investor determines to reduce the Rights Offering to $4.2 billion, holders of existing equity will receive rights to purchase approximately 115.3 million shares of common stock in the reorganized Company for $4.2 billion at a deemed exercise price of $36.56 per share.

Refinance of DIP Facility

Pursuant to the New Plan Agreement, the Plan Investor will support the Company with its announced efforts to refinance successfully in full its existing $2.0 billion DIP facility and $2.5 billion prepetition revolver and term loan facilities with JPMorgan Chase Bank, N.A. and other lenders as announced by the Company on December 18, 2006.

Improved Corporate Governance Structure

Because no preferred stock in the reorganized Company possessing veto rights will be issued and there will be no transfer of control pursuant to this Commitment, the common equity holders will be protected from a corporate governance perspective post-confirmation of the Plan. The executive management team as announced on December 18, 2006 will be left in place post-confirmation. Highland will also accept the terms of the Appaloosa/Cerberus Proposal that the Company be governed by a twelve (12) member Board of Directors, ten (10) of whom would be independent directors and two (2) of whom would be the new Executive Chairman and a new Chief Executive Officer and President.

However, with respect to the appointment of post-confirmation directors, a Board selection panel of six members will be created to choose the members of the reorganized Company board (the “Panel”). The Panel will consist of the Plan Investor and a maximum of two other significant stockholders of the reorganized Company, one representative from GM, one management representative, and one representative from the equity committee. This Panel will provide representation by all significant stakeholders, without granting control of this process to the Appaloosa/Cerberus Group.

Similar to the Appaloosa/Cerberus Proposal, the new board of directors will satisfy all New York Stock Exchange/NASDAQ independence requirements. Executive compensation for the reorganized Company will be on market terms and reasonably acceptable to the Plan Investor, and the overall executive compensation plan design will be described in the Company’s disclosure statement and incorporated into the Plan.

Pension Funding

The Plan Investor will support the Company’s earlier commitment to preserve its salaried and hourly defined benefit U.S. pension plans and will include an arrangement to fund approximately $3.5 billion of its pension obligations similar to that proposed by the Appaloosa/Cerberus Group.

- 4 -

OTHER

Please note that the undersigned has devoted substantial time and resources to preparing this Commitment in a very short time frame given the timetable endorsed by the Company in connection with the Appaloosa/Cerberus Proposal. The undersigned is (1) prepared to proceed expeditiously to complete final documentation reflecting this Commitment; and (2) take appropriate action to move forward toward the full formulation and implementation of the transactions contemplated by this Commitment, including supporting the Debtors’ efforts to obtain entry of any approval order required by the Bankruptcy Court.

This Commitment is subject to, and expressly conditioned on in a manner consistent with the Appaloosa/Cerberus Proposal, among other items, (1) the execution and delivery by all signatories thereto of definitive documentation reflective of the matters set forth herein; (2) the completion of limited confirmatory due diligence; and (3) the entry by the Bankruptcy Court of an order, in form and substance, reasonably satisfactory to Highland approving the transactions set forth herein. We are willing to proceed with the due diligence review immediately and will execute an appropriate confidentiality agreement as required or requested, by the Board.

Due to the financial strength of our organization and our position in the financial community, please be advised that we can provide, or cause to be provided, funds to satisfy the financial requirements of this Commitment and are in a position to consummate this transaction expeditiously.

Please note, moreover, that the material terms and conditions of this Commitment are as set forth herein, but this Commitment does not and cannot encompass all matters to be addressed in the definitive documentation. Those matters that are not addressed or definitively set forth herein are subject to further negotiations and future agreement of the parties.

At a minimum, we believe this Commitment sets forth a transaction that should be considered by the Board of Directors and its financial advisors, and requires the members of the Board to do so in an orderly and contemplative fashion consistent with their fiduciary duties to exercise due care. We believe the timetable that has been proposed by the Appaloosa/Cerberus Group as reflected in the Bankruptcy Court filings is not conducive to the process required by the Board to adequately assess these types of proposals. Therefore, we would respectfully request that the Board fully consider and discuss both proposals with its advisors before proceeding with a transaction that is not in the best interests of all stakeholders of the Company. To the extent the Board determines to proceed in accordance with the existing timetable, we are also willing to take the requisite action necessary to proceed.

We are available at any time to meet with the Board or representatives of the Board regarding this Commitment and look forward to the opportunity to address any questions or concerns you might have.

- 5 -


		Very truly yours,

		HIGHLAND CAPITAL MANAGEMENT, L.P.

		By:		/s/ Patrick H. Daugherty

		Name:		Patrick H. Daugherty
		Title:		Secretary

cc: Mr. Robert “Steve” Miller, Chairman
Mr. Rodney O’Neal, President and Chief Executive Officer

- 6 -

EX-99.(2) 3 d42307exv99wx2y.htm JOINT FILING AGREEMENT exv99wx2y

EXHIBIT 2

JOINT FILING AGREEMENT

In accordance with Rule 13d-1(k) promulgated under the Securities Exchange Act of 1934, as amended, the persons named below agree to the joint filing on behalf of each of them a Statement on Schedule 13D (including amendments thereto) with regard to the common stock of Delphi Corporation, a Delaware corporation, and further agree that this Joint Filing Agreement be included as an Exhibit to such joint filings. In evidence thereof, the undersigned, being duly authorized, hereby execute this Joint Filing Agreement as of December 22, 2006.


		Highland Credit Strategies Fund

		By:		/s/ James Dondero

				Name: James Dondero
				Title: President

		Highland Capital Management, L.P.

		By:		Strand Advisors, Inc., its general partner


		Strand Advisors, Inc.

		By:		/s/ James Dondero

				Name: James Dondero
				Title: President

		James Dondero

				/s/ James Dondero


		Highland Multi-Strategy Onshore Master SubFund, L.L.C.

		By:		Highland Multi-Strategy Master Fund, L.P., its managing member

		By:		Highland Multi-Strategy Fund GP, L.P., its general partner

		By:		Highland Multi-Strategy Fund GP, L.L.C., its general partner

		By:		Highland Capital Management, L.P., its sole member

		By:		Strand Advisors, Inc., its general partner


		Highland Multi-Strategy Master Fund, L.P.

		By:		Highland Multi-Strategy Fund GP, L.P., its general partner

		By:		Highland Multi-Strategy Fund GP, L.L.C., its general partner

		By:		Highland Capital Management, L.P., its sole member

		By:		Strand Advisors, Inc., its general partner

-----END PRIVACY-ENHANCED MESSAGE-----

/s/ James Dondero

Name: James Dondero

Title: President