By Frank Williams
April 3, 2008 -
GM must have a lot more cash laying around than they're letting on. The Wall Street Journal [sub] reports The General is thinking seriously about taking on more of Delphi's pension liabilities on top of the $1.5b they've already agreed to assume. In an SEC filing last month, Delphi stated their pension fund is short about $3.8b; how much of that extra $2.3b GM is thinking about taking on is anyone's guess. However, experts say getting the pension money from their sugar daddy will grease the skids for six major investors who had planned to pump $2.55 into the company. The investors are threatening to take their money and run if Delphi can't get everything straightened out by Friday, so expect GM to act quickly. Then all Delphi has to do is come up with $6.1b in debt financing to exit Chapter 11. Piece o' cake!
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POWERED
April 3rd, 2008 at 8:13 am
I have to wonder if Toyota and other companies, such as Hyundai, which I believe also buy some components from Delphi, have second options ready and primed to go once/if GM walks away?
Perhaps GM could simply re-absorb Delphi.
Anyone know if the non-US operations of Delphi are also in bankruptcy? Or, if it were allowed to fold up and blow away, if the non-US operations would continue on?
I figured a Delphi bankruptcy would severely damage GM. It just seems to be happening in a different way that I expected.
Now, American Axle…. that’s playing out in the way that I thought Delphi’s debacle would!
April 3rd, 2008 at 8:56 am
Menno,
I can’t speak for Hyundai, but Toyota will almost certainly have a back up supplier. They own Denso and have good relations with other suppliers, so they’ll jump at the chance to pick up Delphi’s slack.
The only bit which DOESN’T make sense to me is this:
Toyota are famous for making sure that their suppliers can supply them sustainably (that’s the important part) and efficiently (I work for one of Toyota’s suppliers, not saying who). So how come Toyota didn’t spot this massacre at Delphi……?
April 3rd, 2008 at 9:20 am
Katie,
I suspect they did spot it, but were tied to Delphi because of their relationship with GM. Just a guess, but it makes some sense to me. I would also bet that they have back up plans.
April 3rd, 2008 at 10:18 am
GM does appear to have a “rainy day fund.”
Looking at the AA strike, Gm has 30 + plants idle. I think they have close to 50+ plants. That’s a lot of real estate to deal. And in plant machinery and equipment.
April 3rd, 2008 at 2:03 pm
Vehicle sales are decreasing as the country teeters on recession. Parts suppliers Delphi, American Axle, and Plastech are in or near bankruptcy. WOW, what a story. Better than any currect TV drama. And no author has ever written a fantasy to equal the high salaries the executives pay themselves.
Thank you “TheTruthAboutCars” keep us informed.
April 3rd, 2008 at 4:56 pm
Let’s see…Delphi is broke, unprofitable and owes more than it’s worth. You’d think there’d be a lot more businesses eager to invest in this hot prospect! Or are all six “investors” bound and gagged, have guns pointed at their heads, and are being handed pens and checkbooks?
April 3rd, 2008 at 6:01 pm
Does anyone know what happened with Delphi’s problems with their earnings statements. I’ll bet no one went down for the creative book keeping that hid the symptoms until the patient was near death.