General Motors expects to lay claim to as much as $1.5 billion in additional supplier bailout funds to go along with $2 billion already approved.
In its revised restructuring plan, GM also said former parts unit Delphi Corp. is unlikely to emerge from almost four years of bankruptcy in the near term without government help -- and may not exit at all.
The additional $1.5 billion supplier bailout draw would give GM up to $3.5 billion of the $5 billion that the U.S. Treasury Department has granted to help weather a 49 percent decline in North American auto production this year.
Chrysler LLC has spoken for the remaining $1.5 billion to aid its suppliers.
Under the program, the U.S. Treasury provides the loans to GM and Chrysler, which in turn mete out funds to select parts makers. The program allows the designated suppliers to be paid quickly for parts already shipped and guarantees those payments, even in a bankruptcy.
GM and Chrysler risk bankruptcy if they are unable to obtain additional aid from Treasury to continue operating. A Chrysler filing could come as early as this week, when it faces a U.S. deadline to create an alliance with Italys Fiat S.p.A.
GM originally wanted $2 billion of the supplier bailout funds. It is now claiming as much as $1.5 billion in supplier funds that Ford Motor Co. has decided not to use. Ford, which hasnt sought U.S. aid, has said it has enough cash to pay its suppliers .
We would not object to giving the money to anyone else if it would help the viability of the entire industrys supply base, said Ford spokesman Todd Nissen.
The loans come with a cost. GM and Chrysler must pay 5 percent of whatever they borrow for their suppliers. In the case of GM, that is up to $175 million for the $3.5 billion, the U.S. regulatory filing said. GM said it is qualifying suppliers for the program.
GM spokesman Dan Flores declined to comment on the supplier bailout or Delphi beyond the specific language in the securities document. Delphi spokesman Lindsey Williams couldnt be reached.
The GM update on Delphi spells out what GM executives have been implying for weeks.
Because of tight credit markets, the supplier has been unable to raise about $3 billion in exit financing from banks and the private sector. Delphi has been in Chapter 11 since October 2005.
Over that time, GM has taken charges totaling nearly $11 billion to pay for the restructuring of Delphis North American operations. But with GM now on federal life support, it doesnt have the money to see Delphi out of court protection.
Our ability to assist Delphi further by providing additional financial support or assuming additional Delphi obligations to its work force and retirees is restricted by the terms of the first U.S. Treasury loan agreement, GM said.
In todays filing, GM said it may consider buying Delphi manufacturing operations to ensure a supply of parts. The supplier was GMs parts unit until it was spun off as an independent public company in 1999.
The White House automotive task force has temporarily held up GMs purchase of Delphis unwanted steering operations until Delphi files additional restructuring plans by May 9. GM intends to add $150 million to the $300 million it has agreed to advance to Delphi.