DETROIT -- General Motors (GM) yesterday announced the sale of its Class A Membership Interest in Delphi Automotive LLP (Delphi) back to Delphi for $3.8 billion. GM acquired the stake in the business in October 2009 in conjunction with the creation of the new Delphi Automotive as part of its Chapter 11 bankruptcy reorganization plan.  

"We are systematically delivering on our commitment to strengthen and simplify our balance sheet," said Dan Ammann, GM senior vice president and CFO.

GM will report a book gain of approximately $1.6 billion in the first quarter of 2011 related to the sale.  

Earlier this month, GM sold its Ally Financial Series A preferred stock for $1 billion in a registered public offering. The Ally transaction will result in a book gain of $0.3 billion to be recorded in the first quarter of 2011.  

Delphi also purchased the Class C interests owned by the Pension Benefit Guaranty Corp. (PBGC) for $594 million. These transactions, funded with cash on the company's balance sheet and $2.5 billion of new bank debt as part of a $3 billion credit facility provided by J.P. Morgan Securities LLC, fully retire the ownership shares acquired by GM and the PBGC in connection with Delphi's acquisition by a group of private investors in October 2009.

Based on these transactions, the company says it now has “an efficient capital structure and a prudent level of debt.”
"These transactions represent an important step in positioning Delphi to continue to increase shareholder value," said Rodney O'Neal, Delphi president and CEO. "We continue to have significant financial flexibility and remain committed to pursuing opportunities that drive value creation."
Delphi reported solid 2010 year-end revenues of $13.8 billion and EBITDA of $1.4 billion, demonstrating significant growth, continued focus on operational excellence and strong emphasis on earnings and cash generation.