General Motors chief executive Rick Wagoner has said that “most important issues have been decided” when it comes to a pending agreement with top supplier and former subsidiary Delphi Corp.
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According to Dow Jones, he indicated that a necessary labour pact and a court decision on the company’s financial bailout plan are significant steps left in forging a final resolution for the components maker, which filed for bankruptcy in 2005 and is striving to emerge this year.
Wagoner, speaking to the news agency during a group interview at company headquarters, said the road to a broad resolution with Delphi, labour unions and other constituents has taken longer than was originally expected. Now there is significant bickering surrounding the equity framework under which Delphi plans to emerge from bankruptcy, which threatens to throw another kink in the saga, Dow Jones said.
The report said a new plan floated last month by Delphi and an investor team led by Appaloosa Management and Cerberus Capital Management could help finalise an essential post-bankruptcy funded plan designed to help Delphi emerge from bankruptcy in 2007. Delphi endorsed the deal, under which it would receive needed funding to operate and a 5% stake in Delphi would be granted to GM, Dow Jones said, noting that the funding plan, worth $3.4bn, has met considerable opposition in bankruptcy court by a variety of Delphi stakeholders, including hedge fund Highland Capital, which is Delphi’s second-largest shareholder.
Wagoner reportedly said the bankruptcy court and Delphi’s board of directors will make the appropriate decision, but noted that the Highland opposition “could slow the process down.” Even if Highland finds favour in an upcoming court hearing, it may not get an audience with GM until as late as April due to GM’s agreement with Delphi and its endorsed investors, Dow Jones added.
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By GlobalDataThe news agency noted that the Appaloosa-Cerberus plan sets a deadline for action by the UAW and GM that could speed resolution or derail it altogether. Under the deadline, both Delphi and the investors have the unilateral right to terminate the agreement if labour deals aren’t reached with unions and GM by 31 January.
That can be extended to 28 February but a deadline puts pressure on negotiations that have been going on for months. The termination rights can be extended past 28 February if all parties agree, Dow Jones said.
