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Delphi Back on the S&P List

Back in good graces after decade of turmoil.

by on Dec.24, 2012

Seven years after a bankruptcy filing launched what became a sweeping reorganization – and the longest corporate run through the Chapter 11 process in American business history — Delphi Automotive is final returning to the good graces of Wall Street.

The auto parts manufacturer Delphi Automotive (US:dlph) will replace Titanium Metals Corp. in the S&P 500 index, S&P Dow Jones Indices said in a statement Tuesday evening.

The change will take place after the close of trading on Dec. 21, when Precision Castparts Corp. is expected to complete its acquisition of Titanium Metals.

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Delphi, which assumed control of a substantial portion of General Motors’ in-house parts empire in 1999, filed for bankruptcy in 2008 as its struggled with an unwieldy cost structure built around traditional union contracts that had been undercut and rendered unsustainable by the rapid globalization of the auto industry.

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Former Car Czar Will Testify About Abandoned Delphi Pensions

About 70,000 Delphi employees lost retirement plans under bankruptcy.

by on Jun.21, 2011

Former auto czar Ron Bloom will be facing some tough questioning on the GM bailout and Delphi bankruptcy.

Former White House “Car Czar” Ron Bloom will be one of those called to testify in what could be an angry Congressional session looking into the long-term impact of the General Motors bailout.

Among other things, lawmakers are expected to focus on the decision to abandon the pension program run by Delphi, GM’s former parts subsidiary.  Delphi, which underwent the longest corporate bankruptcy in U.S. history, walked away from a program that covered about 70,000 retirees.  Some have lost as much as 65% of their benefits.

Among others called to testify will be Vince Snowbarger, the deputy director of the Pension Benefit Guaranty Corp., the agency created to assume control of failed pension programs.  Delphi’s pension program was underfunded by $7 billion, and the PBGC will cover $6.1 billion of that – making it the second-largest failed pension program ever assumed by the agency.

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While Delphi did not receive a direct federal bailout, its survival – and eventual emergence from Chapter 11 – depended on its ongoing relationship with GM.  That was enough to bring it under the umbrella of the House Oversight and Government Reform Committee, which will be holding a Wednesday hearing titled, “Lasting Implications of the General Motors Bailout.”

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Delphi Files for IPO

Once-bankrupt supplier hoping to raise millions, possibly billions, through stock offering.

by on May.31, 2011

Delphi CEO Rodney O'Neal prepares to take the supplier public again.

Delphi Corp., which endured the longest corporate bankruptcy in U.S. history, has filed with the Securities Exchange Commission asking for permission to sell shares through an initial public offering that plays up the company’s potential for growth in China and other overseas markets.

Delphi filed for bankruptcy in 2005 in a bid to scrap what it described as an unsustainable business model that included a heavy reliance on its former parent, General Motors, and a large manufacturing base in the United States. The bankruptcy wiped up Delphi’s old shareholders and left the company’s salaried pension fund in the hands of the Pension Benefit Guarantee Corp.

The Troy-based automotive supplier spent four years under Chapter 11 protection before emerging from bankruptcy in October 2009 with a much smaller manufacturing presence in the U.S. and a focus on supplying high-tech componentry, including safety equipment, fuel-management and electronics.

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The new Delphi is now counting on growth in the automotive market in the next few years to impress would be investors.

Global vehicle production is forecast to grow at a compound annual growth rate of 6.8% from 2010 to 2015. In the near-term, the mature markets, including North America and Western Europe, are expected to grow at 3.3%, from 2010 to 2015, for an increase of approximately 6.9 million units, while the emerging markets are forecast to grow at 10.3%, during the same period, for an increase of approximately 22.2 million units.

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GM Selling Off Delphi Stake

Federal pension fund also selling off stake, leaving hedge funds in control.

by on Mar.31, 2011

Delphi CEO Rodney O'Neal.

Putting further distance between it and its one-time parts subsidiary, General Motors will sell off its stake in the massive automotive supplier Delphi.

The $3.8 billion deal will be paired with the sell-off of the stake in Delphi held by the federal Pension Benefit Guarantee Corp.  Both GM and the PBGC received their shares in the supplier following its emergence from bankruptcy protection in mid-2009.

Those moves will leave control of Delphi Automotive in the hands of the hedge funds that also took a stake in the supplier as it wrapped up what was the longest run through Chapter 11 in U.S. industrial history.

The decision to sell off its Delphi holdings comes just weeks after GM also generated $1.0 billion through the sale of its preferred holdings in Ally Financial, the lender once known as GMAC.  The Ally transaction will generate a one-time gain of $300 million, while GM will book a $1.6 billion profit from the sale of its Delphi shares.

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“We are systematically delivering on our commitment to strengthen and simplify our balance sheet,” said Dan Ammann, GM senior vice president and chief financial officer as of April 1.

Officially known as Class A Membership, GM took its stake in the supplier as part of the complex financial package that helped Delphi finally get back to business after it voluntarily plunged itself into bankruptcy in 2005.

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Delphi’s Battenberg Cleared of Fraud but Guilty of Three Other Charges

Will pay substantial fines but serve no jail time.

by on Jan.13, 2011

Former Delphi Chief Battenberg found guilty on three charges, cleared on a fourth.

The long trial of former Delphi Chairman and Chief Executive Officer J.T. Battenberg ended with a jury clearing him of fraud – but he was still found him liable for misrepresentation and responsible for accounting errors involving a $237 million payment the supplier made to former parent General Motors.

The Securities and Exchange Commission’s civil complaint against Battenberg alleged that the former Delphi CEO had tried to hide the Dephi’s financial condition in order to improve its performance in the market.

Battenberg faced only civil, rather than criminal charges.  He nonetheless sought vindication via a jury trial but now faces a substantial fine and possibly other sanctions.

He faces no jail time but could be barred from serving on the board of any publicly traded company on top of those fines.  It was a serious rebuke to an executive who was considered one of Detroit’s major corporate stars during the 1980s and 1990s.

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Former Delphi CEO Battenberg’s Trial Wrapping Up

Prosecutors claim exec misled investors before Delphi bankruptcy.

by on Jan.06, 2011

Did former Delphi Chief J.T. Battenberg - shown here at a 2003 conference - mislead investors?

Did the former chief executive of mega-supplier Delphi intentionally mislead investors even as the company was spiraling down towards bankruptcy? That’s the key question as the long federal trial of J.T.Battenberg former Delphi chairman and CEO wraps up, with both defense attorneys and prosecutors laying out their final arguments.

The Securities and Exchange Commission’s civil complaint against Battenberg charges that the former Delphi executive – who retired as the company collapsed — set out to hide Delphi’s financial woes.

Battenberg faces no jail time but could be barred from serving on the board of any publicly traded company — and be forced to pay substantial fines.  It also would serve as a severe rebuke to an executive who was considered one of Detroit’s major corporate stars during the 1980s and 1990s.

The SEC’s prosecutors have hammered on the idea that Battenberg deliberately deceived outside investors about the handling of an item in the company financial filings in the years before Delphi filed for bankruptcy in 2005. (The company only emerged from Chapter 11 protection last year, marking the longest corporate bankruptcy in U.S. history.)

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Delphi Pension Dust-Up Under Federal Investigation

Did undue political influence cost many retirees their pensions?

by on Sep.15, 2010

Former Delphi CEO Steve Miller initially promised to keep both blue- and white-collar pension programs once he got the partsmaker out of Chapter 11.

A new federal investigation is underway, looking at whether undue political influence ultimately cost thousands of Delphi retirees a large chunk of their pensions.

An independent counsel has been brought in to review a controversial decision by the Pension Benefit Guarantee Corp., or PBGC, to assume control of the Delphi Corp. salaried pension program as the supplier finally emerged from its long run through bankruptcy.

Neil M. Barofsky, a special inspector general for the Troubled Asset Relief Program, said, in a letter to a New York congressman, that his office would examine whether officials from the Treasury Department’s automotive task force — or the White House — pressured General Motors to protect the pensions of Delphi’s blue collar workers, while the PBGC slashed the pensions of salaried employees.

Barofsky said his office would try to determine whether political considerations played any role in the decisions, “favoring hourly over salaried retirees.”

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There’s no question there were a lot of vested parties desperately hoping to drag Delphi out of its Chapter 11 quagmire, last year, the longest any major industrial company had ever been caught in the bankruptcy process.

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Delphi Plans “Furious Execution” of Plans

After four years in Chapter 11, partsmaker aims for gains.

by on Jan.13, 2010

"Furious execution" needed for Delphi to ensure success.

After what seems to be a record-long trip through the bankruptcy process, Delphi is back in business and hoping to take advantage of what appears to be a resurgent global auto industry, its CEO declared Wednesday.

But it’s a very different Delphi from the one that went into Chapter 11, stressed the company’s President and Chief Executive Officer Rodney O’Neal.

It has abandoned most of its old-line businesses in order to focus on high-tech lines in the safety, environmental and connectivity fields, while slashing its worldwide workforce in half.  And the restructuring isn’t completely over, O’Neal promised.

But that’s in line with what faces the entire auto industry, he noted during a speech at the Automotive News World Congress and during a subsequent interview.  “We’re not through,” even if 2010 looks better than last year.

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The industry, he warned, is still “too bloated.  We need to lose weight.”  Despite the fact that General Motors and Chrysler abandoned dozens of assembly plants and component facilities as part of their own bankruptcies, O’Neal pointed out that global automotive production capacity is still around 86 million, even through sales, last year, were closer to 50 million.

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Delphi Finally Out of Bankruptcy – But Now What?

Giant supplier hopes to rebuild but obstacles remain.

by on Oct.06, 2009

Despite a successful record as a turnaround specialist, it's taken Delphi Corp. CEO Steve Miller four years to get the auto parts company out of Chapter 11.

Despite a successful record as a turnaround specialist, it's taken Delphi Corp. CEO Steve Miller four years to get the auto parts company out of Chapter 11.

When both General Motors and Chrysler blasted through the courts in mere weeks, it might have seen like the bankruptcy process was being completely transformed to help the auto industry rebuild.

But if so, somebody forgot to alert Delphi Corp., the giant supplier and former partsmaking arm of GM that is today wrapping up its court-protected reorganization – but only after a grueling process that has dragged on for almost four years to the day.

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Plenty has changed since Delphi first filed for Chapter 11.  The company has closed or sold off an assortment of operations, giving the heave-ho to thousands of workers, while most of those still on the payroll will be making significantly less than they did before.

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Delphi Faces Rocky Exit From Bankruptcy

Delphi's new owners have only put up $750 million.

by on Aug.18, 2009

When the deal is completed, Delphi will no longer be a unionized company.

When the deal is completed, Delphi will no longer be a unionized.

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.

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