The plan is a complex transaction in which GM acquires Delphi’s steering business based in Saginaw, MI and four components plants in Indiana, Michigan, and New York. This allows GM to ensure it receives the supply of components it needs from those operations, a supply that was threatened earlier this year when it seemed that Delphi might be liquidated.
The other Delphi businesses go to its lenders, and certain assets described as non-core will be sold off over time. Owed about $3.4 billion by Delphi, the lenders will gain the assets by forgiving the debt, and have agreed to provide Delphi with $750 million in new financing. The Delphi assets taken over by the lenders will continue to use the Delphi name. Current Delphi CEO Rodney O’Neal will remain in that position and, according to Delphi, the company will have a new board of directors.
GM, now owned by a combination of the U.S. and Canadian governments and the pension fund of its largest union, and freshly out of its own bankruptcy proceeding, will be contributing to this deal with payments to Delphi’s lenders during bankruptcy and by dropping certain claims against Delphi. The Pension Benefit Guaranty Corp., which is the federal pension regulator, will take over Delphi’s pension plans for about 70,000 retirees and active workers. It will be responsible for approximately $6.2 billion of the total $7 billion in liabilities. —[email protected]
