Cerberus group's plan to buy Delphi hits hurdle

By From Automotive News| Apr 18 2007
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An investor group's plans to buy bankrupt auto parts maker Delphi Corp. has hit a snag, with the union not agreeing to cut future wages and benefits for new hires, the Wall Street Journal reported on its Web site today.

The group of investors, led by Cerberus and Appaloosa Management, has offered to back a $3.4 billion financing plan to support Delphi's emergence from bankruptcy.

The news follows an Automotive News report on Monday that the United Auto Workers leadership has scheduled a meeting April 26 at a pair of Delphi plants in Oak Creek, Wis., near Milwaukee, in preparation for a possible strike.

The plants make catalytic converters and electronic modules. The plants would be a good choke point to shut customers' assembly plants, especially those at General Motors, the source said. The plants also supply Toyota Motor Corp.

Cerberus has expressed concerns to the UAW, General Motors and Delphi about the auto parts maker's profitability a few years from now, when new hires' pay increases, the newspaper reported.

The burden of keeping negotiations at Delphi going has fallen on GM, the paper said, adding that it could force GM to further subsidize wages and benefits for new and future employees at Delphi.

The standoff could also affect Cerberus's plan to acquire the Chrysler group, the newspaper said.

Delphi, Cerberus and UAW could not be reached for comment immediately.

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