Published: May 10, 2008 12:17 am            

DELPHI: Company reports wider loss in first quarter

NEW YORK — Auto parts maker Delphi Corp. reported Friday that it lost more money in the first quarter than it did a year ago, but that an expanded credit line will still allow it to emerge intact from bankruptcy protection.

Delphi lost $589 million in the first three months of this year, on revenue of $5.3 billion, compared to a loss of $533 million on revenue of $5.7 billion in the same period in 2007.

The company, based in Troy, Mich., also said it had increased its available credit to $4.35 billion from $4.1 billion. Delphi said that would give it enough money to support its plan to get out of bankruptcy, which has been delayed repeatedly because of a crisis in the availability of credit and the withdrawal of a key investor.

Early last month, Appaloosa Management LP pulled out of a plan to invest as much as $2.55 billion in return for equity in a reorganized Delphi. At the time, Appaloosa and five other investors said they still hoped to participate in the reorganization, just not under the deal that had been agreed upon earlier. Delphi recorded a $79 million loss in the quarter for fees it had paid when it first entered the agreement.

It also reported $42 million in costs related to buyout and early retirement offers to union workers. Delphi has been slashing its unionized work force in the U.S. while expanding its overseas presence.

Delphi also said Friday that General Motors Corp. has agreed to speed up payments it would have made to Delphi once it emerges from Chapter 11 bankruptcy protection. GM, which is Delphi’s former parent, accounted for 31 percent of Delphi’s revenue in North America in the first quarter, compared to 62 percent a year ago. The two companies are intertwined through a number of legacy obligations including pension plans and labor contracts.

The company also said it would not seek to extend waivers for funding its pension plans from the IRS and Pension Benefit Guaranty Corp. Delphi said the waivers, which are needed when a company can’t make the required contributions to its plans, were no longer needed according to a valuation of the plan as of Oct. 1, 2007.

The PBGC, the government agency that backs up pension plans, warned Delphi Friday that without the waivers, the company should complete the planned transfer of pension obligations to GM by Sept. 30, or the cost of the transfer could grow. A Delphi spokesman said there are plans to transfer $1.5 billion in obligations to GM.

Delphi has been operating under Chapter 11 bankruptcy protection since October 2005. It spends roughly $12 million to $14 million a month on bankruptcy lawyers and financial advisers who work on its case.

        

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