Mumbai: Car parts manufacturer Delphi Corporation came a step closer to exiting bankruptcy after it backed a $2.55 billion financing package by a group led by Appaloosa Management LP, rejecting Highland Capital Management LP offer to invest up to $3.3 billion in the ailing firm.

In a filing with the US Securities and Exchange Commission, Highland Capital, Delphi''s second-largest shareholder, said it would seek additional discussions with Delphi for a possible deal.

Highland had proposed to invest up to $2.4 billion in new Delphi shares, $450 million in Series A convertible preferred stock and $450 million in preferred stock, according to the filing.

The Appaloosa group agreed to buy $800 million of convertible preferred stock and about $175 million of common stock in the reorganised company. It would also buy unsubscribed shares of common stock related to a $1.6 billion rights offering that would be made to shareholders.

The Appaloosa-led group''s offer to invest up to $2.55 billion in Delphi will be key to bringing the parts supplier out of bankruptcy protection.

Other investors in the group are Harbinger Capital Partners Master Fund I, Merrill Lynch, Pierce, Fenner & Smith Inc., UBS Securities LLC, Goldman Sachs & Co. and Pardus Capital Management LP.

Delphi secured concessions last month from the 16,000-strong UAW-represented employees. The four-year pact with the company''s biggest union cuts wages for many longtime workers, but secures thousands of jobs at plants that once were in jeopardy.
Agreements have to be reached with four other unions representing about 3,000 workers.

Delphi, which entered bankruptcy protection in October 2005, expects to emerge before the end of the year.