Mumbai: Auto parts maker Delphi Corporation has terminated the equity purchase and commitment agreement and related plan framework support agreement with Cerberus Capital Management L.P. and other investors.

Delphi said it had terminated a $3.4 billion financing plan to bring the company out of bankruptcy protection but that it expected to sign a new deal this month. The company said it planned to emerge from bankruptcy by the end of the year, within six months of its original timetable. Its board is scheduled to meet next Monday to consider a new financing agreement.

Delphi said these developments are not expected to prevent the company from filing its plan of reorganisation and related documents with the bankruptcy court before the current expiration of the company''s exclusivity period or emergence from Chapter 11 reorganisation this year.

Delphi filed a motion on June 29 seeking bankruptcy court approval of a ratified Delphi-GM agreement with the United Auto Workers (UAW). Delphi is currently engaged in settlement discussions with its second and third largest US labor unions and is working to conclude discussions with those unions as well as three smaller unions as soon as possible.

The company also confirmed that its discussions with GM on a comprehensive settlement agreement had entered the documentation phase and that it expected a settlement with GM to be incorporated into the company''s plan of reorganization.

Last month, UAW members approved a deal that allows some plant closings, keeps others open and cuts wages for longtime workers from around $27 per hour to a pay range for everyone that runs from $14 to $18.50.

GM would subsidise the wages and pay other costs for longtime employees under the deal, and it also will operate or find a third party to run several Delphi plants. The UAW is Delphi''s largest union, representing 17,000 of its 20,000 US hourly workers.

Delphi said it is working to conclude negotiations with its remaining unions as quickly as possible. About 3,000 Delphi workers are represented by other unions.

Delphi cautioned that nothing in Court or regulatory filings made by the company or the company''s public disclosures shall be deemed a solicitation to accept or reject a plan in contravention of the bankruptcy code or an offer to sell or a solicitation of an offer to buy any securities of the company.

Delphi was spun-off from General Motors on May 28, 1999. On October 8, 2005, Delphi filed for Chapter 11 bankruptcy, following which the Securities and Exchange Commission granted an application by the New York Stock Exchange to delist Delphi''s common stock and bonds.

Delphi manufactures the MagneRide suspension dampers, which use ferrofluid to adjust the damping rate of the shock absorbers based on road conditions, to offer an effective compromise between ride and handling. These can be found on the Audi R8, Audi TT, Chevrolet Corvette C5, Cadillac Seville STS and Ferrari 599.

Cerberus and other equity firms, including Appaloosa Management and Harbinger Capital, had agreed in December to buy Delphi for $3.4 billion and planned to bring it out of bankruptcy in the first half of this year. Delphi picked the Cerberus-led bid over a competing offer of $4.7 billion made by Highland Capital Management.

Cerberus, which is based in New York and headed by the financier Stephen A. Feinberg, is expected to close this month on its purchase of 80.1 per cent of Chrysler for $7.4 billion. Cerberus also holds a majority stake in GM''s financing arm, the General Motors Acceptance Corporation, and has a pending deal to buy the assets of the bankrupt supplier Tower Automotive for $1 billion.