Delphi Corporation is now officially scheduled to emerge from bankruptcy by the end of next month, but the company’s future remains uncertain, after a staggering $600 million loss in the second quarter. Delphi said the loss followed large sales volume declines due to substantial reductions in vehicle production, as the Great Recession hit its original equipment customers particularly hard.
Delphi’s new owners have only put up $750 million to ease the company out of bankruptcy, and it is likely the highly-leveraged financiers behind the Delphi deal will have the patience to wait it in hope for larger gains when the economy and production start growing again. A question remains as to whether there is enough capital to carry the company going forward.
GM is taking over four Delphi plants, in Saginaw, Michigan, Kokomo, Indiana, and Lockport and Rochester, New York where workers are still represented by the United Auto Workers. When the deal is complete, Delphi will no longer be a unionized company.
The remaining businesses will go to the lenders group, which has agreed to put up the $750 million in new financing on which the company will depend. “Non core assets” will be sold as soon as practical in today’s market where asset prices are depressed.