Delphi settles investors suits

Delphi workers in Dayton approved a contract that will close their plant.

STAFF/WIRE REPORTS

Delphi Corp. announced that it has settled class-action lawsuits brought by investors and that it cut its financial losses in July.

The settlements, which were reached with lead plaintiffs Friday, cover participants in its employee retirement plans and buyers of its debt and equity securities from March 2000 to March 2005. The settlements must be approved by bankruptcy court and federal district court judges.

The plaintiffs, including several large pension funds, contend the former Delphi managers fraudulently inflated the company’s financial results to make it look more attractive to investors.

The agreements call for participants in Delphi’s employee retirement plans to receive an interest in Delphi’s bankruptcy case of $24.5 million and $22.5 million in cash from insurance carriers.

Investors who bought Delphi’s debt securities will receive an allowed claim that wasn’t specified. Buyers of Delphi’s equity securities will receive an allowed interest of $204 million in Delphi’s bankruptcy case and $90 million in cash from other defendants and insurance carriers.

The allowed amounts in the bankruptcy case will receive the same treatment as Delphi’s general unsecured creditors.

Meanwhile, Delphi filed documents in bankruptcy court that said it lost $169 million in July, compared with $350 million in July 2006. The number from July 2006 excluded $184 million in one-time charges that were related to worker retirement and buyout expenses.

Revenue for July rose to $1.01 billion from $894 million in July 2006.

Plant to close

In Dayton, workers at a Delphi plant that makes brake hoses and engine mounts ratified a contract that will eventually close the facility in exchange for early retirement and buyout provisions, according to leaders of United Steelworkers Local 87.

President Dennis Bingham said the contract passed Thursday 475-34. About 600 workers are employed at the plant.

Delphi, based in Troy, Mich., is the biggest supplier of parts to General Motors Corp. and other auto manufacturers. Cutting labor costs has been a key element of Delphi’s effort to emerge from bankruptcy protection.

Bingham said he does not know when the plant will close. He said Delphi is considering an offer for the plant’s brake hose business and is marketing its engine mounts business.

The deal already had been approved by a bankruptcy judge along with another in nearby Vandalia where 300 workers were eligible to vote Friday on a similar proposal. That plant is expected to remain open.

The Steelworkers were the last union working on a new contract with Delphi.