Delphi Talks Likely to Go Past Deadline

A deadline that threatens a key cash infusion for struggling auto parts maker Delphi Corp. likely was to pass with no agreement between the company, its unions, General Motors Corp. and a group of investors, a person familiar with the negotiations said on Wednesday. The person, who asked not to be identified for fear of jeopardizing the negotiations, said talks were under way and likely will continue past Wednesday's deadline into February or beyond because investors have no intention of walking away from the deal.

From AFX News Limited

DETROIT — A deadline that threatens a key cash infusion for struggling auto parts maker Delphi Corp. likely was to pass with no agreement between the company, its unions, General Motors Corp. and a group of investors, a person familiar with the negotiations said on Wednesday.

The person, who asked not to be identified for fear of jeopardizing the negotiations, said talks were under way and likely will continue past Wednesday’s deadline into February or beyond because investors have no intention of walking away from the deal.

Three private equity investors — Appaloosa Management LP, Cerberus Capital Management LP and Harbinger Capital Partners Master Fund I — along with Merrill Lynch & Co. and UBS Securities LLC have agreed to invest $1.4 billion to $3.4 billion in a restructured Delphi.

But the deal is contingent upon Delphi settling on wages, benefits and other issues with its unions.

The investors and Delphi each have the right to terminate the agreement Wednesday if no deal is reached with the unions and GM, which once owned Delphi.

Delphi has been operating under bankruptcy protection since October of 2005. Meanwhile Wednesday, Delphi announced that it has picked Platinum Equity, a Beverly Hills, CA-based mergers and acquisitions firm, as the primary bidder to buy its global steering and halfshaft business.

Robert Remenar, Delphi Steering president, said he could not disclose the terms of any deal until it is finalized, but said it would still have to be approved by a federal bankruptcy court judge in New York. Platinum intends to retain Remenar as CEO if the deal goes through, Delphi and Platinum said in a statement.

Remenar would not say if a deal is contingent upon a wage reduction agreement with unionized workers, but he said Delphi steering needs to accelerate cost reductions to improve the long-term health of its business. Platinum and Delphi have had preliminary talks with the United Auto Workers union, the companies said.

Remenar said it has not been determined if the steering unit would negotiate separately from current talks under way between Delphi and its unions.

"Different businesses with different products need competitive cost structures that would match the competitive environment in which they operate," Remenar said. "Everyone has, I think, unique challenges with respect to their cost structure. One size does not fit all."

Delphi’s steering and halfshaft businesses, which make steering and drivetrain components, have 22 facilities around the world employing 6,400 people. In the U.S., the facilities are located in Saginaw, MI, and Athens, AL.