DELPHI CORP ! Ein Riese erwacht!

The exit plan stands on several key pillars: a commitment by equity investors to inject up to $2.55 billion, a deal with former parent General Motors Corp. over legacy labour obligations and agreements with labour unions that led to a massive reduction in the size of the unionized work force. Still missing is $4.5 billion of a total exit financing package worth roughly $6 billion in loans that Delphi needs before it can emerge.


The reorganization plan was approved last week by 81 per cent of about 4,000 eligible creditors who voted. One class of creditors rejected it.


The judge let stand the part of the company's compensation proposal that gives more than 500 managers stock totalling eight per cent in the reorganized Delphi.


The United Auto Workers union argued the compensation plan was unfair to union workers, many of whom took early retirement or buyout offers in order to help the company get out of bankruptcy.


Lawyer Peter DeChiara said UAW workers did not sacrifice all they did to give management a windfall at the end of the case. "It's a double standard Delphi uses in approaching compensation for its executives versus its hourly employees," DeChiara said.


The UAW and other unions saw the elimination of 27,000 of 33,000 jobs over the course of the case.


"Communities throughout the Midwest have been deeply impacted, families devastated," said Thomas Kennedy, a lawyer for the International Union of Electronic-Communications Workers of America.


Executive compensation was the most significant change to corporate bankruptcy law under a reform act put into effect in 2005, just nine days after Delphi filed for bankruptcy. The change was designed to prevent companies from giving executives retention bonuses.


The company's own compensation consultant, Nick Bubnovich of Watson Wyatt Worldwide, said Friday the cash bonus plan had some characteristics of a retention program, and that he knew of no other company in bankruptcy that rewarded such a large number of executives for emergence.

Delphi sales revenue in China tops $13.8 B, up 40% y-o-y

Updated: 2008-01-23   Source:Gasgoo




Keywords: Auto.. Ford.. auto parts..

Global auto part supplier giant Delphi has sold more than RMB 10 billion ($13.8 B) worth auto parts products to Chinese automakers last year, up 40 percent from one year earlier, the Shanghai-based Wenhui Daily reported today.

Delphi supplier auto parts products to some leading automakers in China, like FAW-VW, Shanghai VW, Shanghai GM, Changan Ford and Dongfeng.

Delphi entered Chinese market in 1993. By April of 2007, Delphi¡¯s total investment in China topped $500 million; the global auto parts giants operates 17 business units, which include an investment company, a global R&D center, a technology service center, a trading company and 13 production units.

Last month, Shanghai Delphi Automotive Air Conditioning Systems Co. (SDAAC), China's largest auto air conditioning system supplier, has signed a three-way joint venture deal with two partners in Beijing. The new factory to be built will have an annual capacity of 200,000 auto air conditioners, local media Auto Weekly reported yesterday.

Under the agreement signed on December 28, 2007, Shanghai Delphi will hold a 51 stake in the joint venture while Beijing Automotive Industry Holding Corp (BAIC) or Beiqi will hold a 40 stake and a local auto parts supplier Beijing Guanghua Shiyuan Co will hold the remaining 9 percent.



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Drain said his approval relied on Delphi making changes to executive compensation provisions to reduce cash payments triggered by emergence. The United Auto Workers and the International Union of Electronic Workers-Communications Workers of America objected to payments to the company's management.

Delphi must cut cash payments to more than 500 managers to $16.5 million from $87 million, the judge said. He didn't demand changes to stock-based incentives. Drain criticized Delphi's compensation consultant for not considering data that didn't support large payouts.

The auto-parts maker had predicted it may still win confirmation of the plan by using the so-called cram-down process, under which a ``no'' vote can be overcome if the company can prove creditors will receive more under the plan than through a liquidation.

Cram Down Plan

Delphi was allowed to cram down the plan on creditors that voted against it because the company contributed value so the company can retain equity interest, Delphi attorney John Butler Jr. said.

Delphi said Jan. 17 that it reached a deal with Davidson Kempner Capital Management LLC, Whitebox Advisors LLC and other holders of its bonds, resolving their objection to its turnaround plan. In exchange, Delphi agreed to pay the group's legal fees up to $5 million.

Delphi attorney John Butler Jr. said the settlement saves the cost of a potentially lengthy court fight over the value of the company. Separately, Drain overruled a request by Wilmington Trust Co., the trustee for Delphi's senior notes, to set a ``sunset date'' for the plan if he chooses to confirm it.

Delphi was unable to obtain $7.1 billion in exit financing it originally sought, first cutting the amount to $6.8 billion and then $5.2 billion. The company said Jan. 7 it would reduce the amount of the loan further because its cash position had improved.

Equity in Delphi's reorganized business will be worth about $7.8 billion. A prior version of Delphi's plan assumed an equity value of $13.4 billion and a ``distributable equity value'' of $8.1 billion.

Delphi reported a $231 million net loss in November, bringing the total net loss for 11 months of 2007 to $2.8 billion.

The company sought court protection under Chapter 11 in October 2005, listing $19.1 billion in debt in its amended schedules of property and liabilities.

Delphi fell 1.5 cents to 15.5 cents in over-the-counter trading.

The case is In re Delphi Corp., 05-44481, U.S. Bankruptcy Court, Southern District New York (Manhattan).

To contact the reporter on this story: Erik Larson in New York at elarson4@bloomberg.net ; Christopher Scinta in New York bankruptcy court at cscinta@bloomberg.net .

Last Updated: January 22, 2008 17:49 EST