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GM Comments on Delphi Filing Under Chapter 11


October 2005
 Filed under: GENERAL MOTORS CORPORATE Car News | GENERAL MOTORS CORPORATE Headlines
2005-10-08 -- DETROIT - General Motors Corp. (NYSE: GM) today said it expects no immediate effect on its global automotive operations as a result of Delphi Corp.'s (NYSE: DPH) Chapter 11 filing. GM plans to work constructively in the Chapter 11 proceedings with the court, Delphi, its unions and other participants in Delphi's restructuring process. GM's goal is to pursue outcomes that are in the best interests of GM and its stockholders, and that enable Delphi to continue as an important supplier to GM.
Delphi has indicated to GM that it expects no disruption in its ability to supply GM with the systems, components and parts it needs as Delphi pursues a restructuring plan under the Chapter 11 process. Although the challenges faced by Delphi during its restructuring process create operating and financial risks for GM, that process is also expected to present opportunities for GM over time.

For example, on the one hand, Delphi or one or more of its affiliates may reject or threaten to reject individual contracts with GM, either for the purpose of exiting specific lines of business or in an attempt to increase the price GM pays for certain parts and components. As a result, GM might be adversely affected by disruption in the supply of automotive systems, components and parts which could potentially force the suspension of production at GM assembly facilities.

On the other hand, GM estimates that it currently pays a purchase price premium to Delphi in the aggregate of approximately $2 billion a year above globally competitive market prices for systems, components and parts purchased from Delphi's North American operations. GM believes that a restructuring of Delphi through the Chapter 11 process provides GM with an opportunity to reduce or eliminate that purchase price premium, over time, as well as improve the quality of systems, components and parts it procures.

In connection with the Delphi split-off, GM has provided limited guarantees with respect to certain benefits payable by Delphi to former GM U.S. hourly employees who transferred to Delphi relating to pensions, post-retirement health care and life insurance. The Delphi Chapter 11 filing does not by itself trigger any of the benefit guarantees.

GM intends to provide additional information regarding matters affecting GM due to Delphi's filing under Chapter 11 as soon as practicable.

Forward Looking Statements

All statements contained or incorporated in this Form 8-K which address events or developments that we expect or anticipate may occur in the future, such as, but not limited to, GM's production and operating performance, the impact of Delphi's bankruptcy on GM's global automotive operations, ability to address future obligations and to do so out of normal operating cash flow, the enforceability of the right to fully or partially set-off obligations owed to Delphi against amount owed by Delphi to GM, the ability of GM's vendors, including Delphi, to meet GM's current needs and to do so in a timely manner, enforceability of the Delphi's agreement to indemnify GM, the ability to reduce or eliminate the purchase price premium, statements regarding the enforceability of the benefit guarantee, and estimates of financial impact of the benefit guarantee are among the forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements represent our current judgment on what the future may hold, and we believe these judgments are reasonable, actual results may differ materially due to numerous important factors that are described below and other factors that may be described in subsequent reports that GM may file or furnish with the SEC:

* The ability of Delphi to meet its financial challenges;
* Changes in financial conditions of Delphi and Delphi's ability to satisfy the Indemnification if Delphi is cannot meet its financial challenges;
* The impact on GM and GM's other suppliers if Delphi is cannot meet its financial challenges;
* Interpretations of the agreements between GM and Delphi and GM and the unions;
* Interpretations by the Bankruptcy Court and any changes in the federal bankruptcy code;
* Changes in the competitive environment;
* Changes in relations with Unions;
* The ability of the GM to achieve reductions in cost of supplies and to realize production efficiencies, and to implement capital expenditures, all at the levels and times planned by management;
* The ability to met cash flow objectives at the levels and times planned by management; and
* Other factors, risks and uncertainties discussed in our filings with the SEC.

GM does not intend or assume any obligation to update any of these forward-looking statements.

Source: GM

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