GM Friday Bombshell of the Week: $10.6b for Delphi
In keeping with tradition, GM announced it latest “wait ’til the weekend” share-price-rattling revelation: the automaker has agreed to provide an additional $4.6b support to former division and bankrupt parts maker Delphi, from $6b to $10.6b. Justifying the cash burn to Automotive News [AN, sub], GM said it’s doing the deal “to speed the auto parts maker’s emergence from bankruptcy.” Here’s the break down [via The Detroit News] “Under the deal, reached after months of negotiations and outlined in a court filing late Friday, GM would assume responsibility for $3.4 billion of Delphi’s hourly pension obligations — up from $1.5 billion — and make payments totaling $1.2 billion through Dec. 31 to boost the supplier’s balance sheet.” In its press release, Delphi said the cash infusion will put it in a position to pursue exit financing, through an equity-based rights offering. “Pursue” and “secure.” Two different words. In other words, with Delphi’s U.S. business experiencing the same kind of turnaround that GM’s currently “enjoying,” the clock is still ticking on Delphi’s Chapter 7 liquidation.
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