Update: Delphi gets $3.4B, new CEO, Miller stays as Chairman

[nadepalma]

SOURCE: http://money.cnn.com/2006/12/18/news...ion=2006121808

Delphi gets $3.4B, new CEO
Private equity groups investing in bankrupt No. 1 auto parts maker, contingent on deal with union; former president O'Neal gets CEO post.
December 18 2006: 8:33 AM EST

NEW YORK (CNNMoney.com) -- Bankrupt auto parts maker Delphi is getting a $3.4 billion cash infusion from a group of private equity investors, as well as a new CEO.

The deal announced Monday is contingent upon the former General Motors parts unit reaching a new labor deal with the United Auto Workers union. Talks between the UAW, Delphi and GM have been going on more than a year.

The cash infusion will come from Appaloosa Management L.P., Cerberus Capital Management L.P., and Harbinger Capital Partners Master Fund I Ltd., as well as Merrill Lynch & Co. and UBS Securities LLC. The company also announced $4.5 billion in new financing agreements with JPMorgan Chase and a group of lenders

Cerberus also led the group that bought a majority stake in GMAC, the finance unit of GM.

Rodney O'Neal will be appointed CEO and president of the reorganized Delphi, with plans to implement the new plan no later than Jan 1. O'Neal, the brother of Merrill Lynch Chairman and CEO Stanley O'Neal, has been president and chief operating officer of Delta.

Steve Miller, who has been CEO of Delphi, has been the focus of harsh union criticism as negotiations dragged on more than a year. He will remain as chairman of the Delphi under the reorganization.

[nadepalma]

Now that they have this change, I'm kinda wondering if it might affect the negotiations with the UAW at all or not. I'm not sure how far along they are in the turn around and talks to make a difference either way.

[darknight9]

3.4B is a nice shot in the arm.

[nadepalma]

Originally Posted by darknight9

3.4B is a nice shot in the arm.

It is, but I wonder if the UAW will use that as an excuse in the negotitations to get some more cash out of the deal?

Just wondering if this announcement is timed for some other press release coming soon?

[uboys]

Originally Posted by nadepalma

It is, but I wonder if the UAW will use that as an excuse in the negotitations to get some more cash out of the deal?

Just wondering if this announcement is timed for some other press release coming soon?

You think they won't?
The reason they hated Steve Miller the most was that he prevailed against the United SteelWorkers--and they were afraid he'd do the same all over again with Delphi.

[nadepalma]

Originally Posted by uboys

You think they won't?
The reason they hated Steve Miller the most was that he prevailed against the United SteelWorkers--and they were afraid he'd do the same all over again with Delphi.

No I think they would. I was being sarcastic more than anything. I know about Miller and the Steel Workers -- that industry is still going through changes even now.

[steverino]

The article states that this money is earmarked for the pension plan to bring it to a fully funded status. That should aliviate some of the UAW's fears. I think GM's exposure (est. $6.0 Billion) might be for healthcare related issues or to supplement pay structures going forward. For example if the UAW accepts lower wages GM would pay the difference to get the worker's pay to the current level.

[mbukukanyau]

the Stock is taking a pounding this morning. Down 11%
I hold the Stock. Not good. UAW is the reason for this mess

[uboys]

Originally Posted by mbukukanyau

the Stock is taking a pounding this morning. Down 11%
I hold the Stock. Not good. UAW is the reason for this mess

If you don't retract that's you'll soon pay.
Just wait and see oh brave one!

[stevecmh]

thats alot of cash. hopefully it do good

[lilredcrvtt]

Sure, lets blame everything on the workers! You ARE a genius! I know, let the management work on the line for a while....they ought to be able to fix any messes, right? They have done a brilliant job so far.....NOT!

[johnny smallblock]

Originally Posted by mbukukanyau

UAW is the reason for this mess

I know. The poor executives had no hand in the contracts they're now complaining about. The UAW did that all on their own.

[mike's 01ws6]

Originally Posted by mbukukanyau

the Stock is taking a pounding this morning. Down 11%
I hold the Stock. Not good. UAW is the reason for this mess

Delphi and GM spun off an unprofitable company and ran it into the ground, not the UAW.

[mbukukanyau]

This Marxist talk irks me.
you do not make 70K for tightening bolts.
How do you expect your company to compete aganist South Africans?
The labor market is now as global as the product market.

[jbernie]

Originally Posted by nadepalma

It is, but I wonder if the UAW will use that as an excuse in the negotitations to get some more cash out of the deal?

Just wondering if this announcement is timed for some other press release coming soon?

Actually given the $$ are based on the Delphi and the UAW coming to agreement, I think it might work better for Delphi as if the negotiations break down and the Delphi requests are viewed as overly harsh they can pin the loss of the investment on the UAW and then potentially be forced to cut staff again.

If Delphi plays hard ball and the UAW rejects the proposal (which would be fair), and Delphi screws themselves, then the UAW can still lose as they could sell of the units of the company to the highest bidder and shut up shop.