Delphi To Make Pension Payments

By: Associated Press
By: Associated Press

Delphi Corp. said it expects to make a $1.3 billion payment to its pension plan after shifting $1.5 billion in unfunded liabilities to former parent General Motors Corp.

In a Securities and Exchange Commission filing Monday, the auto-parts company said it has formulated a tentative deal with the Internal Revenue Service and Pension Benefit Guaranty Corp., the U.S. government's private pension insurer, that would allow it satisfy its pension obligations through a combination of cash payments and the transfer of some unfunded liabilities to a pension plan sponsored by GM.

Delphi said the IRS has agreed to conditional funding waivers allowing it to defer making a required payment due June 15 on its pension plans for hourly and salaried employees. Those funding waivers are conditioned on Delphi filing a Chapter 11 plan by July 31 and emerging from bankruptcy protection by Nov. 15.

Under the proposed pension-funding deal, which requires bankruptcy court approval, Delphi would provide the PBGC with $150 million in letters of credit to support funding obligations under the plans. After exiting Chapter 11 protection, Delphi would pay $20 million in cash to the plan for hourly workers for 2007.

Under the Employee Retirement Income Security Act, Delphi was required to pay $751 million into its pension plans in the first half of the year, but the auto-parts maker has paid just $100 million, according to the regulatory filing.

The PBGC has previously estimated Delphi's pensions may be underfunded by as much as $10.6 billion.

Troy, Mich.-based Delphi, the nation's largest auto parts supplier, filed for bankruptcy protection in October 2005. GM has been trying to reach an agreement with Delphi and the supplier's creditors over the size of the auto maker's obligation to its former parts unit and its workers.

Delphi currently has until July 31 to file a plan of reorganization that outlines how creditors will be paid.


WILX 500 American Road Lansing, MI 48911 517-393-0110
Gray Television, Inc. - Copyright © 2002-2014 - Designed by Gray Digital Media - Powered by Clickability 7376936