Delphi reaches settlement with GM

Friday, 7 September 2007

Delphi has reached agreements with its former parent company, General Motors (GM), which remove big hurdles to its emergence from bankruptcy protection.

The deal follows agreements on work and pay with the six labour unions at Delphi as well new investment deals.

Delphi has also filed a reorganisation plan with the bankruptcy court.

The US car parts manufacturer became a separate company in 1999 and has been under Chapter 11 bankruptcy protection for almost two years.

Talks with banks

Under the latest agreement, Delphi has agreed to pay GM $2,7bn (£1.3bn) to fund early retirement and buyout plans offered to hourly workers.

In turn, GM has agreed to reimburse Delphi for labour costs over $26 an hour at some of its plants.

Delphi says it is in talks with a consortium of banks and is confident of securing the $7bn it needs to emerge from bankruptcy protection.

Its reorganisation plan also includes a $2.5bn investment from a group led by Appaloosa Management.