Delphi emerges from bankruptcy

Oct 06, 2009 (Detroit Free Press - McClatchy-Tribune Information Services via COMTEX) -- DPHIR | Quote | Chart | News | PowerRating -- Delphi Corp. said today it has closed the deal with General Motors Co. and its lenders that has ushered the auto parts supplier out of bankruptcy after four years in Chapter 11.

"We are grateful for the support and loyalty of our customers, who have placed their trust in Delphi's ability to provide world-class products and uninterrupted supply, and the support of our suppliers who have contributed broadly to our efforts," said Delphi CEO Rodney O'Neal, who will stay on as the company's chief executive.

Delphi entered bankruptcy with 44 U.S. plants and expects to have only four U.S. plants when it emerges. One of those also will be shutting down by the end of the year.

When it filed for bankruptcy, Delphi employed 50,600 people in the United States. In June, Delphi had only 14,000 workers in the United States.

Delphi's bankruptcy dragged on through most of 2009 because of the credit crunch, which made it nearly impossible for the company to find financing.

But even before that, this bankruptcy was a dramatic one. In April last year, a key $2.5-billion investment fell through at the last minute, derailing the company's plan back then to emerge from Chapter 11.

During the course of its bankruptcy case, Delphi has changed from a catch-all supplier -- a compilation of most of GM's parts plants -- to a company that is now focused on electronics, powertrain systems and heating and cooling systems.

To narrow its business, Delphi has sold numerous businesses including interiors, steering bearings, exhaust, catalyst, suspension and brakes.

Delphi's total sales have shrunk from $23.4 billion in 2005 to $18 billion last year.

Emerging from bankruptcy will help Delphi win new contracts, but it also will be a milestone for GM, said Arthur Wheaton, a labor expert from Cornell University. The automaker has booked $12.5 billion in charges related to Delphi's bankruptcy case. It also has taken over four Delphi plants and Delphi's steering division. GM has put $1.7 billion into the deal that has allowed Delphi to emerge from bankruptcy today.

"We're pleased to see a final resolution to the bankruptcy and wish the newly emerged Delphi success," said GM CEO Fritz Henderson. "The closing transactions allow Delphi to effectively serve its customers by focusing on its core business. The agreements also enable GM to access essential components and steering technologies."

Automotive analysts say completing Delphi's bankruptcy is an important step in stabilizing GM's future. "It's the single largest supplier to General Motors and some of the most strategic components and systems that they buy," said Craig Fitzgerald, automotive consultant with Plante and Moran.

But the process has been turbulent for workers.

"It has been just constant turmoil," said Art Reyes, president of UAW local, which represents 900 workers at a former Delphi plant in Flint. After Delphi scaled the fuel pump and instrument cluster plant down from 2,700 workers, the supplier transferred the operation to General Motors, but still manages the plant in January.

Workers in Flint left one bankrupt company and were moved to another company on the brink of bankruptcy. But Reyes said his plant was slated to close under Delphi's earlier plans. Workers at his plant have a better chance at future work with GM, he said. "We've just had a tremendous number of changes," Reyes said.

Contact JEWEL GOPWANI: 313-223-4550 or jgopwani@freepress.com.

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