GM Greatly Helps Out Delphi

General Motors has agreed to expand its bail-out of Delphi, its biggest parts supplier, by boosting the value of its financial support from $6billion to $10.6billion and implementing the aid package sooner than planned. Delphi has been in bankruptcy protection for the past three years and struggled to finalise a restructuring since a group of private equity investors withdrew in April. The parts maker’s problems have become a millstone for GM, its former parent, which is itself battling to staunch huge losses and dwindling cash reserves.Under the latest deal, announced late on Friday, the carmaker has agreed to assume responsibility for $3.4billion in Delphi pension-fund liabilities, up from $1.5billion previously, and to bolster Delphi’s balance sheet by $1.2biliion before the end of this year. The latest deal was partly driven by threats from the US Pension Benefit and Guaranty Corporation to put a $900million lien on Delphi’s foreign assets as security for the parts maker’s underfunded pension plan. Delphi will seek bankruptcy court approval for the deal on September 23.

My Comment (Personal Input):
Once again, a suffering firm. And a suffering firm helping a suffering firm equals suffering firms. Funny thing is, Delphi used to be owned by GM. It later spun-off and became a fully independent publicly held company (Hence its now name, Delphi Corporation).