GM Sinks Another $350m Into Delphi

Frank Williams
by Frank Williams
gm sinks another 350m into delphi

When is enough, enough? GM has to be asking that about their former subsidiary Delphi. The AP [via Forbes] reports that The General has agreed to lend the parts maker another $350m "so Delphi can maintain a minimum level of liquidity." That brings GM's financial stake in the company they thought they'd [s]dumped[/s] spun-off to $900m in loans. And that's on top of the $3.6b they paid out to cover Delphi's UAW pension liabilities. Delphi has been in Chapter 11 since October 2005. Their bankruptcy original plan included exiting Ch 11 this past spring with an equity deal and massive loans. When Appaloosa Management and other investors backed out of a $2.55b equity deal at the last minute, Delphi had to go back to square one. Last week, bankruptcy Judge Robert Drain ruled that Delphi can file a l awsuit against Appaloosa and the other investors. Until that's settled (and assuming the lawyers don't eat up whatever settlement they get), it looks like GM will continue bailing out their largest supplier. The question is, who will bail out GM?

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4 of 8 comments
  • Nick Nick on Aug 08, 2008
    The question is, who will bail out GM? That's pretty obvious isn't it? After all, what good are taxpayers if they can't bail out failed corporations?

  • Netrun Netrun on Aug 08, 2008

    So if Delphi goes under, it takes GM with it. According to the people responsible for setting the odds for this sort of thing (the insurance banks) there is a greater than 95% chance of this happening. If ResCap goes under, it takes GMAC and GM with it. Again, a greater than 95% of this happening. If GM doesn't shut off the truck plants quick, they will go under. Again, a greater than 95% chance of this happening. Does anybody think there is actually a chance of GM existing 2-3 years from now?

  • INeon INeon on Aug 09, 2008

    Netrun-- I think so, and I'm a Chrysler guy. A bunch of import-loving cheerleaders won't close America's automobile manufacturers down-- Even if they're the majority. The 3 will find their way.

  • Capeplates Capeplates on Aug 10, 2008

    Seems like the pebble in the pond syndrome - once one goes many others will follow. The Delphi/GM link is so intertwined that one cannot exist without the other. Will they be around in two or three years - I wouldn't put any money on it!