GM Set to Pay Delphi Untold Millions
In a previous Wild Ass Rumor of the Day, we asked "GM wouldn't be stupid enough to try to pay all [Delphi's bankruptcy] debt, would they?" It was meant to be a rhetorical question. Dow Jones reports [via CNNMoney ] that The General is "exploring alternatives" that include "providing an additional significant portion of Delphi's exit financing" in their annual report filed yesterday. The filing also said they're willing to reduce their share of the cash distribution they could receive in the bankruptcy settlement and "and accept an equivalent amount of debt in the form of a first-lien note." The amount of this particular portion of GM's cash conflagration is not known. But it doesn't matter whether The General shells out more cash or goes deeper in debt– neither alternative bodes well for the GMs financial health or stability.
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Can someone please remind me again why Delphi was spun off in the first place?
starlightmica asks: Can someone please remind me again why Delphi was spun off in the first place? If you ask the hourly folks, it is a decade long conspiracy by all the auto makers to bring the UAW to where it is today. They let it flounder, file bankruptcy, have the union capitulate, and then have the automakers make sure they lose billions yearly for years so that they can get the same treatment as Delphi got. Hey, it worked.
I think GM 'management' thought they'd be more disconnected from Delphi by the time it sank. I think there were terms in the spinoff obligating GM to pick up the slack in pensions or whatever for Delphi workers for a number of years. Of course the deal was sold to the workers with the idea that Delphi would now be free to grab business from Ford and others. Meanwhile, Visteon workers were given the same pitch. The house(s) of cards came crashing down a little sooner than planned. But the golden parachutes are still in place.