General Motors 2011 Annual Report Download - page 22

GENERAL MOTORS COMPANY AND SUBSIDIARIES
In June 2010 the Venezuelan government introduced additional foreign currency exchange control regulations, which imposed
restrictions on the use of the parallel foreign currency exchange market, thereby making it more difficult to convert BsF to U.S.
Dollars. The restrictions on the foreign currency exchange market affect our Venezuelan subsidiaries’ ability to pay non-BsF
denominated obligations that do not qualify to be processed by the Venezuela currency exchange agency at the official exchange
rates.
Effective January 1, 2011 the BsF was further devalued and the essential rate was eliminated. The devaluation has affected results
of operations in 2011 because our Venezuelan subsidiaries no longer realize gains that result from favorable foreign currency
exchanges processed by the Venezuela currency exchange agency at the essential rate.
Refer to Note 2 to our consolidated financial statements for additional details regarding amounts pending government approval for
settlement and the net assets of our Venezuelan subsidiaries. Refer to “Management’s Discussion and Analysis — GM South America
— GMSA EBIT (Loss)-Adjusted” for impact of Venezuela exchange restrictions on our operations.
Resolution of Delphi Matters
In October 2009 we consummated the transaction contemplated in the Delphi Master Disposition Agreement (DMDA) with Delphi
and other parties. Under the DMDA, we agreed to acquire Nexteer Automotive Corporation (Nexteer) and four domestic facilities that
manufacture steering systems and a variety of automotive components, primarily sold to us. We, along with several third party
investors (collectively, the Investors), agreed to acquire substantially all of Delphi’s remaining assets through Delphi Automotive LLP
(New Delphi).
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. 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. The DMDA settled
outstanding claims and assessments against and from MLC, us and Delphi, including the termination of the master restructuring
agreement with limited exceptions, and established an ongoing commercial relationship with New Delphi. We 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. Refer to Note 4 to our consolidated financial statements for further details on the acquisition of New Delphi
Class A membership interests.
In separate agreements, we, Delphi and the PBGC negotiated the settlement of the PBGC’s claims from the termination of the
Delphi pension plans and the release of certain liens with the PBGC against Delphi’s foreign assets. In return, the PBGC was granted
a 100% interest in Class C Membership Interests in New Delphi which provides for the PBGC to participate in predefined equity
distributions and received a payment of $70 million from us. We maintain certain obligations relating to Delphi hourly employees to
provide the difference between pension benefits paid by the PBGC according to regulation and those originally guaranteed by Old
GM under the DBGA.
In March 2011 we sold 100% of our Class A Membership Interests in New Delphi. Refer to Note 10 to our consolidated financial
statements for details regarding the sale of our equity interests in New Delphi.
20 General Motors Company 2011 Annual Report