General Motors 2010 Annual Report Download - page 165

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Acquisition of Delphi Businesses
In July 2009 we entered into the Delphi Master Disposition Agreement (DMDA) with Delphi and other parties. Under the DMDA,
we agreed to acquire Delphi’s global steering business (Nexteer), which supplies us and other original equipment manufacturers
(OEMs) with steering systems and columns, and four domestic facilities that manufacture a variety of automotive components,
primarily sold to us. In addition, we and several third party investors who held the Delphi Tranche DIP facilities (collectively the
Investors) agreed to acquire substantially all of Delphi’s remaining assets through DIP HOLDCO, LLP, subsequently named Delphi
Automotive LLP (New Delphi). Certain excluded assets and liabilities were retained by a Delphi entity (DPH) to be sold or liquidated.
In connection with the DMDA, we agreed to pay or assume Delphi obligations of $1.0 billion related to Delphi’s senior DIP credit
facility, including certain outstanding derivative instruments, its junior DIP credit facility, and other Delphi obligations, including
certain administrative claims. At the closing of the transactions contemplated by the DMDA, we waived administrative claims
associated with the advance agreements with Delphi, the payment terms acceleration agreement with Delphi, and the claims
associated with previously transferred pension costs for hourly employees. Refer to Note 22 for additional information on the DMDA.
We agreed to acquire, prior to the consummation of the transactions contemplated by the DMDA, all Class A Membership Interests
in New Delphi for a cash contribution of $1.7 billion with the Investors acquiring Class B Membership Interests and the Pension
Benefit Guarantee Corporation (PBGC) receiving Class C Membership Interests. We and the Investors also agreed to establish: (1) a
secured delayed draw term loan facility for New Delphi, with us and the Investors each committing to provide loans of up to $500
million; and (2) a note of $41 million to be funded at closing by the Investors. In addition, the DMDA settled outstanding claims and
assessments against and from MLC, us and Delphi, including the settlement of commitments under the MRA (as defined in Note 22)
with limited exceptions, and establishes an ongoing commercial relationship with New Delphi. We also agreed to continue all existing
Delphi supply agreements and purchase orders for GMNA to the end of the related product program, and New Delphi agreed to
provide us with access rights designed to allow us to operate specific sites on defined triggering events to provide us with protection
of supply. The DMDA contains specific waterfall provisions for the allocation of distributions among the Class A, Class B and Class
C New Delphi Membership Interests. Once the cumulative amount distributed by New Delphi exceeds $7.0 billion, our Class A
Membership Interests will represent 35% of New Delphi with Class B representing the remaining 65%, excluding certain distributions
to New Delphi directors and management and the unsecured creditors of Old Delphi. Our Class A Membership Interest entitles us to
49.12% of the first $1.0 billion of cumulative distributions and 57.78% of the next $1.0 billion of cumulative distributions excluding
certain distributions to New Delphi directors and management. Additional distributions are applied to specific distribution levels until
cumulative distributions reach $7.0 billion.
In October 2009 we consummated the transactions contemplated by the DMDA. The terms of the DMDA provided a means for
Delphi to emerge from bankruptcy and to effectively serve its customers by focusing on its core business. The DMDA also enabled us
to access essential components and steering technologies through the businesses we acquired.
We funded the acquisitions, transaction related costs and settlements of certain pre-existing arrangements through net cash
payments of $2.7 billion and assumption of liabilities and wind-down obligations of $120 million. Additionally, we waived our rights
to $550 million and $300 million previously advanced to Delphi under the advance agreements and the payment terms acceleration
agreement and our rights to claims associated with previously transferred pension costs for hourly employees. Of these amounts, we
contributed $1.7 billion to New Delphi and paid the PBGC $70 million.
The terms of the DMDA resulted in the settlement of certain obligations related to various commitments accrued as of the
transaction date under the Delphi-GM Settlement Agreements. A settlement loss of $127 million was recorded upon consummation of
the DMDA. Additional net charges of $49 million were recorded in the three months ended December 31, 2009 associated with the
DMDA. Refer to Note 22 for additional information on the Delphi-GM Settlement Agreements.
General Motors Company 2010 Annual Report 163