According to the Detroit News, GM said it would also make $1.2 billion in payments through the remainder of 2008 to Delphi to shore up its liquidity. GM and Delphi announced the deal late Friday, heading off the filing of a new lien against another $900 million in Delphi’s foreign assets by the Pension Benefit Guaranty Corporation (PBGC).
GM said it would contribute $10.6 billion in Delphi’s emergence from bankruptcy, increasing the amount it had agreed to take of Delphi’s pension liabilities from $1.5 billion to $3.4 billion (see EBSA Settles $2.2M Bankruptcy Claim for Delphi Pension Plan ), which will “preserve and fund Delphi’s hourly and salaried pension plans” Delphi said in a statement .
If approved by the Court, Delphi would then provide, subject to the union agreement, replacement cash balance or defined contribution pension benefits to its hourly employees; and for eligible salaried employees, Delphi would provide defined contribution pension benefits, a salaried retirement and equalization savings program, and a supplemental executive retirement plan, according to the firm.
“We have remained committed to fully funding our pension plans and to being well-planned, well organized, and well-financed from the beginning of our chapter 11 cases,” said Sheehan. “If approved by the Court, these actions and the additional operating support provided in the Amended GSA and Amended MRA are significant milestones in completing the final phases of the reorganization of our U.S. operations and positioning us to complete the financing required for our emergence from chapter 11 as soon as practicable.”
Delphi said it would re-enter the capital markets seeking financing of its plan of reorganization and would ask a bankruptcy judge to approve the deals on September 23.