GM buys Delphi steering business

DETROIT (AP) — Delphi Corp. said Tuesday it has agreed to sell its global steering business back to former parent General Motors Corp. as part of its plan to raise cash and shed noncore businesses in hopes of eventually emerging from bankruptcy protection.

Terms of the deal for the Saginaw, Mich.-based business, which makes critical parts for the troubled Detroit-based automaker, were not disclosed. In connection with the agreement, GM agreed to increase its credit commitments to Delphi to $450 million from $300 million, effective March 24.

Delphi said the sale of the business and the speeding up of the payments from GM, along with support from its lenders, will give it enough cash to keep it running into May. The companies hope to close the deal, which is subject to bankruptcy court approval and a review by federal officials overseeing GM’s federal loans, by April 30.

Delphi was spun off as a separate company in 1999 by GM. The parts maker went into bankruptcy protection in October 2005 and has yet to emerge.

The two companies said they would work together to continue to supply the factory’s non-GM customers with parts after the sale goes through. In addition, Delphi will provide GM with certain transition services through the end of 2012.

John Sheehan, Delphi’s chief financial officer, said in a statement that GM’s commitment will give Delphi access to additional cash to fund its U.S. operations, along with a “liquidity runway” to finish discussions with its stakeholders and get court approval of changes to its reorganization plan.

GM Chief Operating Officer Fritz Henderson said last month that talks were under way for possible transfer of some of Troy-based Delphi’s factories back to GM. Delphi makes parts that are essential to GM’s business, and GM has an option to take back factories in the original spinoff agreement.

Henderson said in February that GM and Delphi must solve Delphi’s financial woes and says GM’s restructuring plan has money set aside for that purpose. But he said GM could take back an unstated number of plants and inject cash into Delphi, which has been unable to get financing to emerge from bankruptcy protection.

Last week, Delphi Executive Chairman Steve Miller testified at a bankruptcy court hearing that Delphi was still in talks with GM about handing over key plants to the automaker. But Miller cautioned that the discussions were “far from complete” and a deal wasn’t certain.

GM presented a survival plan on Feb. 17 that includes closing five U.S. factories and cutting 47,000 jobs worldwide by the end of the year. The Detroit-based automaker also asked the federal government for up to $30 billion in loans. GM already has received $13.4 billion in federal loan money.

Delphi put the steering division up for sale after identifying it as a non-core business. It had been in talks with Platinum Equity, a Los Angeles-based private-equity firm, but both sides decided to terminate the deal, Delphi said Tuesday.