Last July, Delphi agreed to pay GM $2.7b when it emerged from bankruptcy to resolve "long-standing issues." In November, GM said it would settle for $750m in cash and $1.2b in stock AND it would loan Delphi $750m towards the $6.1b needed to exit bankruptcy. And now… GM's agreed to loan their former division another $2.8b. The Detroit News says the new agreement still transfers Delphi stock to GM (now worth $200m less). And Delphi's cash payment to GM shrinks to $175m. Yes, well, five of the six non-GM investors bankrolling Delphi say they'll walk, unhappy with GM's part of the deal. The lead investor, Appaloosa Management, claims the loans are "contrary to Delphi's stated goal of reducing its reliance on and exposure to GM and developing relationships with other (automakers)." And here's the kicker: Delphi has asked the bankruptcy court to force Appaloosa and its partners to continue supporting the restructuring plan. (How to win friends…) Meanwhile, Delphi is still wrangling over providing collateral for some $2b in unpaid pension obligations. They've only put up $150m so far; the Pension Benefit Guaranty Corp. has filed $600m in liens against Delphi's foreign assets. Legally, the PBGC could seize Delphi's foreign ops to satisfy those obligations. Practically, all Hell would break loose.
Find Reviews by Make:
Read all comments
Did I call it?
Wow. Has that divestiture of their in-house suppliers been a rousing success, or what? The extra savings that a more competitive supplier chain has, I’m sure, got the acolytes lining up in support. Oh, wait. What’s that sound? Complete silence, as they are all in monkey-see, monkey do phase now. Complete with the hands over the ears, eyes and mouth. Now THAT is an appropriate metaphor for the whole ill-timed,ill- though out and poorly executed plan. Besides, efficiency wasn’t the goal of that whole op , anyway. What was it then, you ask? Why, executive bonuses, of course, grasshopper! And you guys think I’ve lost a step. Well, actually I have, but with RF feeding me these soft balls, my sister could hit it out of the park. Come on guys—get back in the damn game. You’re bordering on sycophant status- even the Republicans think so. Therefore, by their logic, say it enough times and it becomes true by default. Why let those pesky facts get in the way? Didn’t all you guys take business ethics as an extension course from Falwell’s Liberty University? That bastion of true liberal critical thinking, brought to you by the book that says the world is 7,000 years old. Hey, good luck on that, fellas. Hell, you might be able to create a whole new branch of science- Backed up by the” ubiquitous” God has spoken” mantra. Meantime, it seems there must be a helluva market for fiddles to play while Rome burns.I could do better. Thats just frighteningly sad and or scary- your pick.
Adding a little reference here.
2.8billion. That’s a lot of money.
Let’s say you counted one number each second, from 1 to 2.800.000.000
That’s hard, as onebilliontwohundredandeightysevenmillionsixsixhundredand eightytwothousandandfiftyfour — takes a bit longer than a second to say. But for the sake of argument – one number per second as you’re counting.
It would take you north of 88 years to complete that, without pause for food or sleep.
GM management must hate the very mention of Toyota.
GM has some massive debt to contend with, and for them to get any new loans at this point is really tough due to their credit rating.
I’m puzzled as to exactly from where is GM “loaning” this 2.8B from? Is GM taking money directly out of it’s piggy bank for this?
The lead investor, Appaloosa Management, claims the loans are “contrary to Delphi’s stated goal of reducing its reliance on and exposure to GM and developing relationships with other (automakers).”
Given the chaos involved here, would any of the transplants want such a relationship?
And it doesn’t stop at Delphi. I feel sorry for the American Axle sales guy who calls on the Tundra plant.
As an aside, this from the newswires:
“British Carlyle Unit Gets Default Notice”
One of Carlyle Group’s (hedge fund operator) overseas units has been hit with massive margin calls from their bankers.
Response:
Freeze all redemptions UFN! “Sorry Mr. Buffett, you will not be able to withdraw your money until the fund manager allows it….”
While Appaloosa is not Carlyle, this is a very, very bad sign.
RF, the GM Death Watch may be nearing resolution.
Don your nuclear blast resistant goggles NOW.
Gratz jojo.
Business in Michigan is just ugly. Fugly even.
I have never shorted anything, but GM is looking like a really ripe target.
This looks like two winos trying to pool their rescources to get one last bottle.