GM Pays $2 Billion to Get Rid of Delphi

After announcing the sale of one major European asset, Opel, and with the second one now on the roll, Saab, General Motors is now making another major step towards a successful restructuring campaign: it will invest up to $2 billion in Delphi Corp to support the sale of the company. Delphi is a former GM subsidiary and one of the largest parts manufacturers working with General Motors.

According to a filing at the Securities and Exchange Commission, General Motors will inject $2 billion of the $30 billion it is to receive from the US government following the Chapter 11 filing to help Californi-based company Parnassus Holdings II LLC take over Delphi.

"Delphi's modified plan represents an important step in resolving the Delphi bankruptcy and in GM's own efforts to reinvent its business," said GM spokeswoman Renee Rashid-Merem in a statement according to a report by drive.com.au.

"Relative to GM's support, the anticipated funding for the investment was contemplated in GM's revised viability plan, as well as the overall debtor-in-possession financing budget agreed to with the US Treasury prior to GM's filing for (bankruptcy) protection,” he added.

Additionally, the American bankrupt automaker will also inject around $250 million to help Delphi during bankruptcy state as well as $500 million in case the sale goes through. In case Delphi and its buyer reach a common point, General Motors will take over several North American production facilities belonging to the parts supplier, including its steering division which will be solely operated by The General. The remaining factories plus other assets resulting from the deal will be sold in the next few years.