By on June 4, 2009

As predicted, the feds have bailed out bankrupt parts maker and former GM division Delphi, through GM, to the tune of $2.5 billion. That doesn’t include the $250 million direct subsidy from American taxpayers. On other hand, GM no longer needs to buy those five Delphi factories GM as previously reported. The cash for the Delphi buyout arrives via one of those “follow the money” deals, as the Wall Street Journal reports. “GM will provide more than $2.5 billion of the $3.6 billion necessary for Beverly Hills-based buyout firm Platinum Equity to gain control of Delphi, according to a person familiar with the matter . . . Under the terms of the transaction, Platinum is expected to invest no more than $750 million, according to the person familiar with the deal. GM would provide the balance in financing. Those financing commitments may or may not be drawn upon in the future, depending on how Delphi performs. The terms of the GM loans couldn’t be learned.” So much for GM CEO’s promise of transparency at yesterday’s Senate hearing.

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11 Comments on “Bailout Watch 545: Feds Fund $2.5 Billion Back Door Delphi Bailout...”

  • avatar

    That $30B isn’t going to go very far… 30-2.5=27.5… tick tock.. tick tock…

  • avatar
    Stu Sidoti

    …and the salaried pension money just disappeared. Another bankruptcy, another case of the pension funding being raided and promises not kept.

    A friend of our family was a pilot for United Airlines and after 30+ years of faithful, accident-free service, United declared C11 and his well-earned pension was gone. Now he receives 1/4 of his original pension via the so-called Pension Guaranty Corporation…Funny thing how the executives all seemed to have bankruptcy-proof pensions. We all have many things we do not like about these dealings, but I hope that somehow, attention can be brought to pension and benefit funding reform. Everyone in the industry has to conform to Sarbanes-Oxley on every deal written, yet when it comes to pension reform, Washington seems to not mind it one bit when companies drop their obligations and place more and more workers onto their rolls.

    Someone on here once opined that ‘ Once of the greatest tragedies of the last 30+ years has been the slow death of shame’….I concur.

  • avatar
    Stu Sidoti

    @ lw….+1.

    GM’s operating monthly budget runs between $12-15 Billion per month. Yes, per month.

    Tick, tick, tick…

  • avatar

    So what, govt will just print more money, and pour more into the companies.

  • avatar


    Check out the 10 year treasury price/yield over the past two weeks..

    The 10 year has shot up so fast that the mortgage market is in chaos.

    Printing money has consequences…

  • avatar

    GM’s operating monthly budget runs between $12-15 Billion per month. Yes, per month. Tick, tick, tick…

    Total operating expenses for the first 3 months of this year totaled $27.2 billion, which is about $9 billion per month. Of course, they had $22.4 billion in revenues. That amounts to an operating income of -$4.8 billion, which is roughly a $1.6 billion per month drain.

    Their net change in cash was -$2.6 billion for that quarter, which is a little under $900 million per month.

  • avatar

    Printing money has consequences…

    That’s interesting. Were you aware that the total public debt during Bush’s last 4 months increased 50% faster than in Obama’s first 4 months?

    Were you also aware that M1 declined from December 2008 to April 2008, and that M2 rose by only 1.7%? From August 2008 to December 2008, it rose at 3 1/2 times that rate.

    You also seem to think that we have inflation problems, when in fact we are experiencing the first annual deflation in over half a century.

  • avatar
    Stu Sidoti

    @long126mike: Thank you for the more accurate numbers. I was generalizing the typical monthly O.R. budgets. The $27.2 Billion in expenses for the first quarter is significantly lower than ‘normal’ due to plant closures, layoffs, and a complete lack of any launch activity. I don’t think they’ll ever get back to $15 Billion a month for a budget with all of the cutbacks and C11 shedding of liabilities, but nonetheless, even now they’re burning nearly $3 Billion per quarter so the $30 Billion in the kitty might not last too long.

  • avatar

    Dear Mr. Clark:

    My brother was a 30+ employee of GM. College graduate, smart, exemplary family man, terrific brother. He took a job with GM right out of college and never looked back. He was fiercely dedicated to GM. He worked very long, hard hours for GM the entire time he was with the company. And he was successful. A few years ago he retired. This week he learned his GM pension is no longer. Gone, thanks to the greedy UAW to whom GM is married and who took it all and GM’s own financial mismanagement. And now GM wants a bailout.

    Here’s my “special offer” to you. I will continue to purchase GM cars if you immediately reinstate my brother’s full pension. He gets it all. He earned it. He depended on it and he worked his life for it and he trusted you to deliver. If not, I am forever through with GM. That’s the deal.

  • avatar

    So will Visteon get the same bailout?

  • avatar

    I see that the judge in the Delphi case ordered an auction of Delphi assets, rather than going along with the government plan to sell only to Platinum Equity at a fixed price.

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