Delphi: The Gift That Keeps On Taking
Published: November 9th, 2007
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GM's financial disclosures have been rather eye-opening as of late. The Detroit News reports The General just revealed it will be making annual payments to Delphi through 2015– or possibly through 2020– for "labor costs." The payments will run just $300 – 400m per year, but as they say, a hundred million here, a hundred million there and eventually you've spent some real money. What it means to the stockholders: GM is on the hook for a minimum outlay of $2.4b that could run as high as $4.4b over the next eight to eleven years. The revelation leaves one wondering what other incidental expenses are lurking over the horizon on GM's deathmarch road to recovery.
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But Wait, There's More! From the Detroit Free Press, November 9, 2007 by Jewel Gopwani, comes this bombshell: "Appaloosa Management LP, the lead investor in a deal that would have pumped up to $2.55 billion into the Troy-based supplier, said in a filing Thursday that it has terminated its agreement because certain conditions were not met." Also, "...investor Goldman Sachs saying it was no longer part of the deal." Finally, "...unsecured creditors have objected to Delphi's investment plan, saying there's a chance the investors could be given shares of the company at no charge, threatening to dilute the value of shares paid to creditors." The full story can be read at: http://www.freep.com/apps/pbcs.dll/article?AID=/20071109/BUSINESS01/711090326/1014 It's really looking like this deal has come undone. jazbo123, you were smart to bail when you did. For the rest of us who depend on Generous Motors and her ugly spawn for a paycheck, it's looking really dark.....
Ryan Knuckles I got the age and the service.its the cajones I'm lacking.
Katie: I don't know if GM is liable if the VEBA goes belly up. There are still unclarified issues around the VEBA and what guarantees GM may have given. A Caterpillar/UAW VEBA went bankrupt and there is ongoing dispute and litigation over who needs to make up the shortfall. http://seekingalpha.com/article/48619-seeking-gm-veba-clarity
Mikey, You should retire while you can and also get a good payoff from GM Canada, you will fine that in retirement you can invest your lump sum payout and along with your GM Pension and Canada Pension you will live quite well, I did but worked for Bell Canada!