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3:10pm: Judge delays decision on Delphi steering sale

March 24, 2009
Tribune Chronicle

NEW YORK (AP) -- A bankruptcy court judge on Tuesday delayed approval of a deal that would allow auto parts supplier Delphi Corp. to sell its steering business to General Motors Corp. in order to give the Obama administration's auto task force more time for review.

At Delphi's request, U.S. Bankruptcy Judge Robert Drain delayed until April 2 approval of the company's motion to allow it to exercise its option agreement on the sale of the business to GM.

A hearing on final court approval of the sale is still scheduled for April 24.

Delphi Attorney Jack Butler said Treasury Department officials indicated Monday night they would have objected to the sale if it had gone forward, but have agreed to reconsider their position and are looking for more information about "Delphi's cash flow needs."

Detroit-based GM, which has already received $13.4 billion in federal aid and is asking for another $16.6 billion, needs Treasury Department approval before it can buy the business.

Delphi, GM's former parts division, has been operating under Chapter 11 bankruptcy protection since October 2005. The auto supplier has been slashing costs, shutting plants and selling off noncore businesses in an attempt to eventually emerge from bankruptcy protection.

In connection with the deal for the business reached earlier this month, GM agreed to increase its credit commitments to Delphi to $450 million from $300 million.

Delphi said at the time that the sale of the Saginaw, Mich.-based business and the speeding up of the payments from GM, along with support from its lenders, would give it enough cash to keep it running into May.

Delphi originally put the steering division up for sale after identifying it as a noncore business. It had been in talks with Platinum Equity, a Los Angeles-based private-equity firm, but a deal could not be reached.

The steering operation employs about 7,730 people globally, including 3,080 in Saginaw, and operates 17 plants worldwide. It posted sales of $2.1 billion last year and under the deal it will become a GM subsidiary and continue to operate as a stand-alone business, at least in the near-term.

 
 

 

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