Delphi files for chapter 11 bankruptcy.
"Our global operations, both U.S. and non-U.S., will continue without interruption," said Robert S. "Steve" Miller, Delphi's chairman and CEO. "Our customers all over the world can be assured that we will continue to meet their scheduling, delivery and production needs in a timely manner."
Delphis foreign subsidiaries were not included in the chapter 11 filing, allowing them to continue operations without U.S. court supervision and not be subject to chapter 11 requirements of the U.S. Bankruptcy Code. The company's global management team will continue to oversee both U.S. and international operations.
The company said it plans to finance its global operations with $4.5 billion in debt facilities plus additional committed and uncommitted financing lines and/or securitization facilities in Asia. Europe and the Americas. The financing includes a commitment in senior secured debtor in-possession (DIP) financing from a group of lenders. Proceeds of the DIP financing, along with cash generated from daily operations and cash on hand, will be used to fund post-petition operating expenses, such as supplier organizations and employee salaries.
"We took this action because we are determined to achieve competitiveness for Delphi's core U.S. operations, and the key to accomplishing that goal is reducing these costs as soon as possible," said Miller. "We simply cannot afford to continue to be encumbered by high legacy issues and burdensome restrictions under current labor agreements that impair our ability to compete. We also must realign our global product portfolio and manufacturing footprint to preserve our core businesses. This will require a substantial segment of our U.S. manufacturing operations to be divested, consolidated or wound down through the chapter 11 process.
"We believe the chapter 11 process will provide the flexibility to address our legacy issues and allow us to take advantage of the fundamental strength of our businesses."
Delphi expects to complete its domestic restructuring and emerge from the chapter 11 protection by early to mid-2007.
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|Title Annotation:||North America|
|Date:||Nov 1, 2005|
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