U.S. pressures Delphi over pension plans: report

(Reuters) –

The U.S. government has asked bankrupt auto

parts maker Delphi Corp (DPHIQ.PK) to transfer more than $1.5

billion of unfunded pension obligations to former parent

General Motors Corp (GM.N) by September 30, the New York Times

said.

The paper, which did not specify how it obtained the

information, said failing that Delphi will have to contribute

more than $2 billion to the fund. It said if a deal was not

reached, Delphi may have to terminate its pension fund.

In a letter to GM and Delphi, the federal Pension Benefit

Guaranty Corp (PBGC) warned it would lay claim to $8 billion if

the automaker does not keep its pension plans intact, the paper

said. This would dilute the claims of Delphi’s other unsecured

creditors, who are owed about $3.5 billion.

Neither Delphi nor the pension agency immediately returned

calls seeking comment.

Delphi, which filed for bankruptcy protection in October

2005, had entered the final stages of exiting bankruptcy in

April when hedge fund Appaloosa Management LP and other

investors pulled out of a plan that would have provided up to

$2.55 billion to support Delphi’s reorganization.

That left Delphi scrambling for alternatives, delaying its

emergence from bankruptcy protection, and raised the cost of

the reorganization process for GM.

When GM spun off Delphi in 1999 it agreed to assume pension

and health care obligations of thousands of Delphi employees

represented by the United Auto Workers union should the

supplier be unable to do so.

(Reporting by Tenzin Pema in Bangalore; Editing by Quentin

Webb)