US hedge fund terminates $2.55B investment agreement with auto parts supplier Delphi

A private equity group said Friday it has terminated its agreement to invest $2.55 billion (euro1.62 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 (euro3.88 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 …