Delphi Announces Effectiveness of Key Agreements and Further Advances its Transformation Activities
Delphi Gains Court Approval on Motions Seeking Modifications to Employee Pension Programs and Modifications to Global Settlement Agreement and Master Restructuring Agreement
U.S. Unions Consent to Transfer Of Hourly Pension Assets and Liabilities
TROY, Mich. - Delphi Corp. (PINKSHEETS: DPHIQ) today announced the effectiveness of several agreements with GM and Delphi’s U.S. unions. These agreements further the significant progress Delphi has achieved in its Chapter 11 cases and, together with other actions Delphi has taken, keep Delphi on track to complete the five key tenets of its transformation by year’s end.
On Sept. 26, 2008, the U.S. Bankruptcy Court for the Southern District of New York authorized Delphi to enter into an Amended and Restated Global Settlement Agreement (Amended GSA) and an Amended and Restated Master Restructuring Agreement (Amended MRA) with GM, as well as an amendment to an existing Advance Agreement with GM. In addition, on Sept. 23, 2008, the Bankruptcy Court authorized Delphi to take actions with respect to certain of its existing pension plans and to implement replacement pension plans.
The Amended GSA and Amended MRA reflect the completion of Delphi’s negotiations with GM to finalize its financial support of Delphi’s legacy and labor costs (including by means of GM’s assumption of Delphi’s U.S. Hourly post-retirement benefits obligations and support for certain labor costs) and to document Delphi’s business relationship with GM going forward. In addition, these agreements, together with Implementation Agreements, which have been entered into with each of the Company’s six U.S. unions, will allow Delphi to immediately commence implementation of a workable solution to its pension obligations through
* a transfer of U.S. hourly pension liabilities and assets from the Delphi hourly pension plan to the GM hourly pension plan in the net amount of approximately $2.1 to 2.4 billion, in the first of two anticipated transfers of U.S. hourly pension liabilities to the GM hourly pension plan, and
* the freezing of substantially all of Delphi’s existing U.S. pension plans and the implementation of replacement plans.
Importantly, the Pension Benefit Guaranty Corporation (PBGC) has stated that as a result of the transfer of pension liability, the PBGC will begin withdrawing its previous lien filings of approximately $1.2 billion.
The amendment to the Advance Agreement provides for an additional $300 million availability to Delphi, which, combined with the net payments of over $900 million to be made by GM to Delphi upon the effectiveness of the Amended GSA and Amended MRA, provides significant enhancement to Delphi’s liquidity position.
These agreements and the actions being taken by Delphi provide the framework for the Company to complete its transformation and emerge from Chapter 11 as soon as practicable.
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