Tuesday, October 11, 2005

Delphi Corporation filed voluntary petitions for business reorganization under chapter 11 of the U.S. Bankruptcy Code

TROY, Mich., Oct. 8 /PRNewswire-FirstCall/ -- Delphi Corporation(NYSE: DPH) today announced that in order to preserve the value of the companyand complete its transformation plan designed to resolve Delphi's existinglegacy issues and the resulting high cost of U.S. operations, Delphi and 38 ofits domestic U.S. subsidiaries filed voluntary petitions for businessreorganization under chapter 11 of the U.S. Bankruptcy Code on Saturday inNew York City. Delphi's non-U.S. subsidiaries were not included in thefiling, will continue their business operations without supervision from theU.S. courts and will not be subject to the chapter 11 requirements of the U.S.Bankruptcy Code. Delphi's global management team will continue to manage boththe U.S. and global businesses. Delphi expects to complete its U.S.-basedrestructuring and emerge from chapter 11 business reorganization in early tomid-2007.

"Our global operations, both U.S. and non-U.S., will continue withoutinterruption," said Robert S. "Steve" Miller, Delphi's chairman and CEO. "Ourcustomers all over the world can be assured that we will continue to meettheir scheduling, delivery and production needs in a timely manner.Throughout this reorganization of our U.S. businesses and beyond, we will beintensely focused on continuing to provide all of our customers withleading-edge technology, product development, superior engineering,outstanding quality products and services, and world-class customer support."

Delphi plans to finance its global operations going forward withUSD $4.5 billion in debt facilities plus additional committed and uncommittedfinancing lines and/or securitization facilities in Asia, Europe and theAmericas. The financing includes USD $2.5 billion borrowed from prepetitionrevolver and term loan facilities and a commitment for up to USD $2 billion insenior secured debtor-in-possession (DIP) financing from a group of lendersled by JPMorgan Chase Bank and Citigroup Global Markets, Inc. The companyplans to obtain approval of an adequate protection package for the benefit ofits prepetition lenders as part of the Company's overall financing activities.

The proceeds of the DIP financing together with cash generated from dailyoperations and cash on hand will be used to fund post-petition operatingexpenses, including its supplier obligations and employee wages, salaries andbenefits. The overall liquidity available to Delphi (including more thanUSD $1 billion on hand outside the U.S., which Delphi does not plan torepatriate to fund U.S. operations) will support its global operations outsidethe U.S. and help ensure the continued adequacy of working capital throughoutits global business units.

"We took this action because we are determined to achieve competitivenessfor Delphi's core U.S. operations, and the key to accomplishing that goal isreducing these costs as soon as possible," said Miller. "We simply cannotafford to continue to be encumbered by high legacy issues and burdensomerestrictions under current labor agreements that impair our ability tocompete. We must also realign our global product portfolio and manufacturingfootprint to preserve our core businesses. This will require a substantialsegment of our U.S. manufacturing operations to be divested, consolidated orwound-down through the chapter 11 process. We believe the chapter 11 processwill provide the flexibility to address our legacy issues and allow us to takeadvantage of the fundamental strength of our businesses."
Miller said that Delphi has been engaged in constructive discussions withrepresentatives of its major unions, but was unable to complete the necessarymodifications to its collective bargaining agreements without assistance fromGeneral Motors Corporation or intervention of the U.S. courts. "Having beenunable to resolve our U.S. legacy issues out of court," Miller said, "wedetermined it was in Delphi's best interest to address the U.S. cost-structureissues through the chapter 11 process now while our liquidity position isstrong. We will be making a further proposal this month to each of our unionsto transform our labor agreements to a competitive labor cost structure and toaddress non-profitable and non-strategic U.S. operations. In addition, weexpect to address pension plans and health and retiree benefits to align themwith competitive benchmarks in the industry and our transformation plan."
Delphi noted that its non-U.S. subsidiaries are generally competitive,cash flow positive and experiencing high growth opportunities. "One of ourprimary goals is to preserve and continue the strategic growth in non-U.S.operations while we address our U.S. cost structure issues through thechapter 11 process," said Miller.
Delphi filed more than 40 "first-day" motions along with its voluntarypetitions covering Delphi's employees and business operations, post-petitionDIP financing, continuing supplier relations, customer practices, certainexecutory contracts, taxes and related matters, utilities, retention ofprofessionals and case administration matters. The company said it expectsthat the Bankruptcy Court will hold hearings on the first-day motionsfollowing the Columbus Day holiday observed in the U.S. and, in the interim,will approve bridge orders granting interim relief with respect to employeesand business operations, continuing vendor relations and customer practicespending the Court's consideration of first-day hearings. Delphi will issue afurther press release this weekend regarding the Bankruptcy Court'sconsideration of Delphi's request for the entry of interim bridge orders andproviding further information about its chapter 11 reorganization casesincluding the date, time and location of the hearing on Delphi's first daymotions.
Among other matters, the relief anticipated from the Bankruptcy Court thisweekend and at the first day hearings next week would permit the company tocontinue to pay wages, salaries and current benefits of U.S. hourly andsalaried employees and certain retiree benefits without disruption and in thesame manner as before the filing. Similar relief for employees in Delphi'ssubsidiaries outside the U.S. is not required because they will continue to bepaid in the ordinary course of business without court supervision.
"The Board of Directors, the senior management team and I greatlyappreciate the loyalty and support of our employees," said Miller. "Theirdedication and hard work are critical to our success and integral to thefuture of Delphi."
Delphi also noted that the execution of its transformation plan throughthe chapter 11 process may give rise to the incurrence of additionalprepetition claims as collective bargaining agreements, executory contracts,retiree health benefits and pension plans, and other liabilities of thecompany are addressed and resolved to maximize stakeholder value goingforward. There is no assurance as to what values, if any, will be ascribed inthe chapter 11 cases as to the value of Delphi's existing common stock and/orany other equity securities. Accordingly, the company urges that theappropriate caution be exercised with respect to existing and futureinvestments in any of these securities as the value and prospects are highlyspeculative.
More information on Delphi's U.S. restructuring, including access to Courtdocuments and other general information about the chapter 11 cases, isavailable at http://www.delphidocket.com/. Delphi has also set up two separatetoll-free information lines: one for specific supplier inquiries, 866-688-8679or 248-813-2601, and another for employees, customers, shareholders and otherinterested parties, 866-688-8740 or 248-813-2602.
For more information about Delphi and its operating subsidiaries, visitDelphi's Media Room at http://www.delphi.com/media/.


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