Delphi exits Chapt. 11 after sale
Lockport plant returns to GM; tech unit stays
Published: October 07, 2009, 12:30 am
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Delphi Corp., once the largest U. S. auto-parts maker, exited bankruptcy Tuesday after almost four years in a sale to lenders and former parent General Motors Co.
Lenders are buying most of Delphi, based in Troy, Mich. GM, which spun off the parts company in 1999, is purchasing some of the supplier’s U. S. plants and its global steering operations.
“We are a more agile, nimble and resilient company,” Delphi Chief Executive Officer Rodney O’Neal said.
The company is being renamed Delphi Holdings LLP.
Effective today, Delphi’s Lockport manufacturing plant returns to GM, while the technical center at the Upper Mountain Road site remains part of Delphi, said Andrea Knapp, a Delphi spokeswoman.
Combined, the Lockport complex has about 1,700 employees. About 200 of them will stay with Delphi at the technical center, Knapp said. A GM spokesman could not be reached to comment on the transition.
Delphi’s Chapter 11 filing on Oct. 8, 2005, was the biggest U. S. auto-related bankruptcy at that time. GM’s costs to aid Delphi, estimated by the automaker at $12.5 billion through March of this year, contributed to GM’s own six-week stint in bankruptcy court protection that ended July 10.
“We’re pleased to see a final resolution to the bankruptcy and wish the newly emerged Delphi success,” 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.”
Elliott Management Corp., Silver Point Capital LP and other lenders won an auction for Delphi in July by bidding the value of debt they were owed by the parts supplier. The loans totaled $3.3 billion, according to court documents. Delphi is also getting $900 million in new funding from more than 20 investors, said Scott Tagliarino, a spokesman for New York-based Elliott.
U. S. Bankruptcy Court Judge Robert Drain approved the sale plan July 30.
The plan calls for Detroitbased GM to take over Delphi’s steering-component business and plants in Wyoming, Mich.; Kokomo, Ind.; and Rochester and Lockport. The investor group is getting factories and operations that are mostly outside the U. S.
The Lockport operation traces its roots to the business started by Herbert C. Harrison in 1910. His company was later acquired by United Motors, which then merged with GM in 1918, making the Harrison Radiator Corp. part of the GM family.
In 1995, the Harrison Radiator Division was renamed Delphi Harrison Thermal Systems. Delphi was an operating unit of GM at the time. The automaker spun off Delphi a decade ago.
The Lockport plant’s transition to GM boosts GM’s local employment figures, while sharply diminishing Delphi’s local footprint.
GM operates an engine plant in the Town of Tonawanda that has reduced its head count over the years. And two area plants that GM used to operate were acquired in 1994 by American Axle & Manufacturing and were subsequently closed by that company.
Delphi in bankruptcy already has pared its operations. The company’s annual sales last year were $18.1 billion, a decline of 37 percent from the $28.6 billion it reported for 2004, its final year before seeking court protection. Delphi’s work force fell 21 percent to 146,600 at the end of last year from 185,200 four years earlier, according to its annual regulatory filings.
Pension Benefit Guaranty Corp., the federal government’s pension agency, in July agreed to take over retirement plans covering 70,000 Delphi workers and retirees. The federal insurer has said it expects to be responsible for about $6.2 billion in shortfalls for the plans.
The parts supplier also has reduced its reliance on GM. The automaker accounted for $1.38 billion, or 27 percent, of Delphi’s $5.18 billion in revenue in this year’s first half. For all of 2004, sales to GM were $15.4 billion, or 54 percent of the supplier’s $28.6 billion total.
News Business Reporter Matt Glynn contributed to this report.
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