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GM CEO Sees Deal with Delphi, Union, in Near Term

Reuters
Wednesday, 17 Jan 2007 | 4:14 AM ET

General Motors Chief Executive Rick Wagoner on Tuesday said a deal with bankrupt former subsidiary Delphi and its union to cut wages and benefits was possible in the "near term."

"We can envision potential for a solution in the relatively near term," Wagoner told reporters on the sidelines of the Automotive News World Congress in Dearborn, Michigan.

"I would hope that next year ... we can talk about how it was done relatively early in '07."

GM , which spun off Delphi in 1999, has been in negotiations with the parts supplier and its major union to allow the supplier to emerge from bankruptcy with lower costs.

GM has made resolving its remaining labor-related issues with Delphi a top priority to avoid a potential strike that would shut down its North American operations.

The automaker has said it expected its total exposure to Delphi's bankruptcy to be $6 billion to $7.5 billion.

Wagoner on Tuesday called a recent decision by a federal bankruptcy judge to approve Delphi's $3.4 billion emergence plan a "positive step in the right direction."

The court last week approved a bankruptcy-emergence deal with a group of investors led by Appaloosa Management and Cerberus Capital Management.

The hearing was initially postponed following an alternative funding plan proposed last month by hedge fund Highland Capital Management.

Under the Cerberus deal, GM would receive 7 million shares of common stock in the reorganized Delphi, $2.63 billion in cash and an unconditional release of alleged Delphi claims against GM.

The initial Delphi plan was seen as a prod to a faster deal between GM, Delphi and the United Auto Workers Union since the plan set a January 31 deadline for reaching a three-way agreement as a condition for the offer.

Wagoner said on Tuesday the process of trying to negotiate a deal has been "incredibly complex," and said remaining issues included looking into sales of certain Delphi facilities.

Delphi filed the biggest bankruptcy in U.S. automotive history in October 2005, aiming to slash wages and benefits and close some operations to reorganize its money-losing domestic unit. International operations were excluded from the filing.

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