GM Helps Delphi — Again

GM Helps Delphi — Again

By Michelle Krebs March 6, 2008

General Motors has offered to provide up to nearly $3 billion in loans to help supplier Delphi Corp. emerge from bankruptcy. That could ultimately bring GM’s total contribution to the emerging-from-bankruptcy effort to $10 billion or more, above the previously estimated $7.5 billion.

GM agreed to help Delphi again after the parts-maker failed to secure the $6.1 billion in financing needed to emerge from Chapter 11, filed in 2005, a bankruptcy and restructuring considered among the largest and most complicated in U.S. corporate history.

Delphi and GM have a critically codependent relationship: Delphi, created by combining GM’s parts-making operations and spinning them off into a separate company in 1999, is GM’s biggest supplier; GM business makes up half of Delphi’s revenues.

At the same time, however, Delphi confirmed some of the investors, led by New Jersey–based hedge fund Appaloosa Management, oppose GM’s additional participation in the bailout. Delphi insists it is necessary. Delphi had planned to come out of bankruptcy by the end of March. Appaloosa has agreed to extend the date but can walk away from the deal between March 31 and April 5.

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.