Delphi Says Can't Extend GM Deal on Price Reductions

CHICAGO (Reuters) - Bankrupt auto parts maker Delphi Corp. (DPHIQ.PK) on Monday said it could not reach a deal with General Motors Corp. (GM.N) to extend an agreement under which the U.S. automaker would pay higher prices for Delphi parts.þþDelphi, which filed for bankruptcy court protection for its North American operations last October, said on March 31 that it would seek to end or renegotiate the unprofitable GM contracts.þþDelphi, which spun off Delphi in 1999, said its net sales will begin to reflect the contractual price reductions it must provide GM as of April 1.þþGM had foregone price reductions previously agreed to by Delphi through the first quarter, but Delphi said that as of April 26 the companies could not agree on terms to extend that agreement.þþIn March, Delphi filed a motion in a U.S. Bankruptcy Court in New York to void its U.S. labor contracts, cut up to 8,500 salaried workers and close or sell a third of its plants globally in its attempt to slash costs and restructure its operations.þþDelphi has said such moves are key to its plans to emerge from Chapter 11 bankruptcy protection in the first half of 2007. The unions have objected to such moves and have threatened to strike Delphi if contracts are tossed out.þþA strike could quickly shutter Delphi and cripple production within days at GM.þþDelphi's reply to the union objections to the contracts rejection motion are due on Monday.þþDelphi said in Monday's filing that it continues talks with its U.S. unions and GM toward a deal to reduce its labor costs, and that GM financial support will be part of any overall agreement.þþ